DTN Closing Grain Comments

Cheap Grains Getting Cheaper

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

General Comments:

Corn was down 1 1/4 cents in the March contract and down 3/4 cent in the July. Soybeans were down 10 3/4 cents in the January contract and down 10 cents in the July. Wheat closed down 3 3/4 cents in the March Chicago contract, down 2 3/4 cents in the March Kansas City, and down 2 3/4 cents in the March Minneapolis contract. The December U.S. dollar index is up 0.11 at 93.69. February gold is down $14.20 at $1,251.90 while March silver is down 18 cents and March copper is up $0.0055. The Dow Jones Industrial Average is up 80 at 24,221. January crude oil is up $0.77 at $56.73. January heating oil is up $0.0332 while January RBOB gasoline is up $0.0367 and January natural gas is down $0.147.

Corn:

March corn closed down 1 1/4 cents at $3.51 1/2 Thursday, still near its low of the year as futures prices slowly bleed premium while cash corn prices stay near their highest prices in two months. Overall, that's a sign of good support for corn prices at these cheap levels while noncommercial traders remain heavily short, focused on the downtrend of futures prices and USDA's estimate of 2.49 billion bushels of U.S. ending corn stocks. Early Thursday, USDA said last week's export sales and shipments of corn totaled 34.5 million and 23.3 million bushels, respectively, another bearish combination that put total corn shipments down 38% in 2017-18 from a year ago. The only potentially bullish factor currently in view is the La Nina related stretch of dry weather in southern Brazil and Argentina. So far, traders have shown no concern about being short in corn with plenty of growing season still to go. Technically, the trend in March corn remains down with downside potential likely limited. DTN's National Corn Index closed at $3.11 Wednesday, priced 42 cents below the March contract and down from its highest price in two months. Early Thursday, there were 796 delivery intentions in December corn. In outside markets, the December U.S. dollar index is up 0.11, even though the European Union turned in respectable GDP growth of 2.6% for the third quarter from a year ago, reported RTTNews.com. The U.S. unemployment report will be released Friday morning.

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Soybeans:

January soybeans closed down 10 3/4 cents Thursday at $9.92, falling back from recent challenges of the October high while the current stretch of dry weather remains a valid concern in both southern Brazil and Argentina. The latest seven-day forecast has some chances for light showers in Argentina on Thursday and Friday, but is expected to remain mostly dry along with southern Brazil. The best rain chances continue to come across central Brazil where crops should be doing well. Judging by this season's slower pace of U.S. soybean exports, China does not seem too concerned about possible crop problems yet. Early Thursday, USDA said last week's export sales and shipments of soybeans totaled 74.1 million and 74.2 million bushels, respectively. The sales were up significantly from a week ago, but total soybean shipments are down 11% in 2017-18 from a year ago. With USDA expecting Brazil to have 195 million bushels of excess soybeans at the end of the current season on Jan. 31, the future of soybean prices is riding on how well the next round of South American crops do in early 2018. For now, the trend remains sideways in January soybeans. DTN's National Soybean Index closed at $9.30 Wednesday, priced 73 cents below the January contract and back down from its highest price in four months. Thursday's delivery intentions for December contracts totaled 169 for soybean meal and 128 for soybean oil.

Wheat:

March Chicago wheat fell 3 3/4 cents to a new contract low of $4.21 1/2, still pressured by Wednesday's higher, 30.0 mmt all-wheat production estimate from Statistics Canada. Not only does Wednesday's announcement steal the spotlight from recent problems of untimely rains in Australia, it also adds to the perception that exporting U.S. wheat will be even more difficult than previously thought. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 11.8 million and 14.6 million bushels, respectively, another bearish combination for the week. On a more upbeat note, export sales and shipments of milo totaled 16.0 million and 10.1 million bushels, respectively, both reaching marketing year highs last week, thanks to active demand from China. While wheat supplies are widely available around the globe, winter wheat futures remain under bearish pressure and continue to struggle to find their low in 2017. DTN's National SRW index closed at $3.86 Wednesday, priced 39 cents below the March contract and still above its August low. DTN's National HRW index closed at $3.65. Among December contracts, there were 90 delivery intentions for Chicago wheat and 1 for K.C. wheat early Thursday. Open interest has become dangerously low in December wheat contracts.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman