Morning CME Globex Update:
USDA posted export sales and shipment numbers for last week that continued to show a lower shipment pace versus a year ago for corn, soybeans, and wheat. Palm oil and canola were modestly higher overnight, possibly favoring a little higher start for soybeans on Friday.
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December corn closed at $3.45 1/4 Wednesday after a day of quiet trading, and it wouldn't be surprising to see another quiet day in Friday's short session. Friday's weather map shows rain in North Dakota, but is mostly dry across the rest of the Corn Belt with warmer temperatures, helping the late harvest effort. Thanks to a mostly warm and dry forecast the next 10 days, it looks like this year's corn harvest will soon be put away. Early Friday, USDA said last week's export sales and shipments of corn totaled 42.6 million and 27.4 million bushels respectively, a bearish combination for the week that continues to reflect increased competition from Brazil. So far in 2017-18, total corn shipments are down 37% from a year ago. Fundamentally, corn's futures prices remain under bearish pressure while cash corn prices are near their highest level in two months. Even though corn supplies are plentiful, a short-covering rally is possible while noncommercial traders hold their largest short position in four years. DTN's National Corn Index closed at $3.09 Wednesday, priced 36 cents below the December contract and near its highest prices in two months. In outside markets, January crude oil is up 80 cents a barrel, trading at its highest spot prices in over two years while part of the Keystone pipeline remains closed and OPEC is expected to extend production cuts.
January soybeans left off at $9.97 1/4 Wednesday with cash soybean prices just 1 cent shy of their highest close in over three months. Wednesday's trading also saw December soybean meal resume its bullish trend with prices finishing at a new one-month high. In addition, Brazil's FOB soybean price is starting at $10.76 early Friday, the highest in over three months and just a penny shy of its high in July. Put it all together and we see bullish potential building in soybean prices while this week's forecast looks dry again for Argentina and shows chances for light rain over most of Brazil. Early Friday, USDA said last week's export sales hit a marketing year low of 31.9 million bushels while shipments totaled 70.7 million bushels. It was another bearish week that now has total shipments down 13% in 2017-18 from a year ago. Technically, the trend remains sideways in January soybeans with bullish potential noted above and a lot riding on South America's weather. DTN's National Soybean Index closed at $9.22 Wednesday, priced 76 cents below the January contract and near its highest prices in three months.
December Chicago wheat closed down a couple cents Friday at $4.22 3/4 after a day of quiet trading. So far, the December contract has stayed within a narrow, 15-cent range through November. Given all the other distractions of Black Friday, that quiet streak is not likely to change in this short trading session, which begins at 8:30 a.m. CST and ends at 12:05 p.m. CST. The U.S. winter wheat crop is off to a dry start in the new season and the forecast still looks dry across the southern Plains for the next ten days. This will be monitored over the winter, but is unlikely to concern traders before next spring. Early Friday, USDA said last week's export sales and shipments of wheat totaled 7.3 and 7.0 million bushels respectively, a bearish combination which makes no dent in U.S. supplies. Technically, the trend in winter wheat remains sideways with no bullish argument in sight. DTN's National SRW index closed at $3.91 Wednesday, priced 32 cents below the December contract and holding well above its August low.
Todd Hultman can be reached at firstname.lastname@example.org
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