DTN Before The Bell Grain Comments

Grains Stay Red; China Buys Beans

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

At 8 a.m. CST, USDA announced China bought 19.3 million bushels (525,000 mt) of U.S. soybeans and another 4.85 million bushels (132,000 mt) were sold to unknown destinations, both for 2017-18. 4.3 million bushels (110,000 mt) of grain sorghum were also sold to China for 2017-18. Earlier, corn, soybeans, and wheat were all lower Thursday, pressured by the usual suspects plus another week of low export activity revealed in USDA's weekly sales report.

Other Markets:

Dow Jones: Higher
U.S. Dollar Index: Higher
Gold: Lower
Crude Oil: Higher

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Corn:

March corn was down 1 1/4 cents early Thursday, still struggling near its lowest prices in 2017 while corn supplies remain abundant and exports are slow. Early Thursday, USDA said last week's export sales and shipments of corn totaled 23.6 and 25.6 million bushels respectively, bearish amounts for the week. Total corn shipments are now down 36% in 2017-18 from a year ago. There is always room for a surprise, but corn prices can't rise without buyers and right now, the mood is clearly bearish. Adding to the bearishness, Thursday's session is starting the day with 1,204 delivery intentions announced. While the corn market slowly works through supplies, the trend in December corn remains down, but sluggish, thanks to active commercial interest and reluctant farmer selling at these low prices. 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 49 cents with many expecting OPEC to extend its production cuts through the end of 2018.

Soybeans:

At 8 a.m. CST, USDA announced China bought 19.3 million bushels (525,000 mt) of U.S. soybeans and another 4.85 million bushels (132,000 mt) were sold to unknown destinations, both for 2017-18. January soybeans were down 5 1/4 cents early, still holding in their sideways range, but encountering bearish forecasts in South America this week with rain expected in both, Brazil and Argentina. As South America approaches the equivalent of June on the calendar, crop conditions are starting to show improvement and with that, the pace of U.S. exports has been slower than expected. Early Thursday, USDA said last week's export sales and shipments of soybeans totaled 34.6 and 81.0 million bushels respectively, putting total soybean shipments down 13% in 2017-18 from a year ago. Technically, the trend in January soybeans remains sideways while fundamental news from South America leaning bearish. 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 was down 3 3/4 cents early. The December contract was down 7 cents, burdened by news that Thursday's session is starting with 2,000 delivery intentions in December Chicago wheat, 55 for K.C., and 200 for Minneapolis. Much like corn, potential speculators in winter wheat are scared off by the bearishness of plentiful supplies and a slow export pace so Thursday's heavy deliveries are no surprise. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 6.8 and 12.4 million bushels respectively, anemic amounts that are not challenging USDA's ending stocks estimate of 935 million bushels for 2017-18. The seven-day forecast for the southwestern U.S. Plains remains mostly dry, but is not having price impact this early in the new crop season. With plenty of winter wheat available in the U.S. and around the world, the trend remains down with commercials offering some resistance to allowing new lows. DTN's National SRW index closed at $3.88 Wednesday, priced 47 cents below the March contract and holding above its August low while futures contracts make new lows.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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Todd Hultman