DTN Closing Grain Comments

Grains' Bearish Tone Prevailed in November

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was up 2 1/4 cents in the March contract and up 1 3/4 cents in the July. Soybeans were down 6 3/4 cents in the January contract and down 5 3/4 cents in the July. Wheat closed down 1 3/4 cents in the March Chicago contract, unchanged in the March Kansas City, and down 1 1/2 cents in the March Minneapolis contract.

The December U.S. dollar index is down 0.12 at 92.98. February gold is down $9.40 at $1,276.80 while March silver is down 11 cents and March copper is up $0.0050. The Dow Jones Industrial Average is up 311 at 24,251. January crude oil is up $0.02 at $57.32. January heating oil is down $0.0240 while January RBOB gasoline is down $0.0015 and January natural gas is down $0.155.

Corn:

March corn closed up 2 1/4 cents at $3.55 3/4 Thursday, a second consecutive day higher with help from a light amount of commercial buying at the end of the month. Technically, there is some encouragement to bulls in this latest move away from November's low, but fundamentally, abundant supplies of corn and a slow pace of export sales make it difficult to motivate potential buyers. Early Thursday, USDA said last week's export sales and shipments of corn totaled 23.6 million bushels and 25.6 mb respectively, bearish amounts for the week that have total corn shipments now down 36% in 2017-18 from a year ago. While corn's bearish arguments are obvious and convincing, downside price risk should be limited, thanks to active buying from commercials and reluctance among farmers to sell this cheap. Also helping to support corn prices, EPA set the corn ethanol blending requirement at 15.0 billion gallons for 2018, as expected (see DTN's "2018 RFS Volumes Set" by Todd Neeley). For now, the trend remains down in March corn, but future direction is apt to be roughly sideways as harvest gets put away for winter. DTN's National Corn Index closed at $3.07 Wednesday, priced 47 cents below the March contract and near its highest prices in two months. In outside markets, January crude oil is up 2 cents after Dow Jones reported OPEC and Russia agreed to extend the current 1.8 million barrels per day of production cuts through the end of 2018.

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Soybeans:

January soybeans finished down 7 cents at $9.85 3/4, pressured by this month's improvement in South American crop conditions and this week's forecasts for more rain in both, Brazil and Argentina. U.S. soybean supplies are considered adequate with USDA estimating 425 mb of ending stocks in 2017-18. However, much of the final tally depends on how South America's crops go this year, and with conditions generally favorable so far, U.S. soybean exports have been running below USDA's expectations. Early Thursday, USDA said last week's export sales and shipments of soybeans totaled 34.6 mb and 81.0 mb respectively, putting total soybean shipments down 13% in 2017-18 from a year ago. At 8 a.m. CST, USDA offset some of the bearishness by announcing China bought 19.3 mb (525,000 metric tons) of U.S. soybeans and another 4.85 mb (132,000 mt) were sold to unknown destinations, both for 2017-18. For now, the trend in January soybeans remains sideways with critical support at the October low of $9.63. DTN's National Soybean Index closed at $9.19 Wednesday, priced 74 cents below the January contract and near its highest prices in three months. Thursday's delivery intentions for December contracts totaled 60 for soybean meal and 179 for soybean oil.

Wheat:

March Chicago wheat ended down 1 3/4 cents at $4.33. The December contract was down 7 1/4 cents after starting the day with news that 2,000 delivery intentions were matched to December Chicago wheat contracts. Another 55 followed for Kansas City and 200 for Minneapolis. For anyone following wheat lately, the heavy deliveries are not a total surprise as this market has been lopsidedly bearish for several months. As often happens when the U.S. and world have plenty of wheat available, U.S. exports dive, adding further downward pressure on wheat prices. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 6.8 mb and 12.4 mb respectively, another bearish combination for the week that offers no threat to USDA's ending stocks estimate of 935 mb. Here in the U.S., Thursday's U.S. Drought Monitor showed increasing areas of dryness in the southwestern Plains and the seven-day forecast remains mostly dry for the region. Technically, the trend of winter wheat futures remains gradually down while cash prices are holding firmly above their lows in August. DTN's National SRW index closed at $3.88 Wednesday, priced 47 cents below the March contract and still above its August low. DTN's National HRW index closed at $3.66, still holding stubbornly above its August low.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman