DTN Closing Grain Comments

Winter Wheat Slides to New Lows

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

General Comments:

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

The December U.S. dollar index is up 0.11 at 93.88. February gold is down $3.40 at $1,249.70 while March silver is up $0.03 and March copper is up 0.0120. The Dow Jones Industrial Average is up 70 at 24,301. January crude oil is up $0.66 at $57.35. January heating oil is up $0.328, January RBOB gasoline is up $0.0186, and January natural gas is up $0.007.

For the week:

March corn closed down 6 cents and July closed down 5 1/4 cents. January soybeans were down 4 1/2 cents while the July was down 4 3/4 cents. March Chicago wheat was down 19 1/2 cents, March Kansas City wheat was down 19 1/2 cents, and March Minneapolis wheat was down 20 1/4 cents.

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Corn:

March corn closed up 1 1/4 cents at $3.52 3/4 on low volume Friday, managing to stay above its contract low, if nothing else. That resulted in a 6-cent drop for the week as noncommercial traders continue to see no reason to own corn or even cover their short positions at these cheap prices. Commercials are on the long side of corn, finding attractive values in the mid $3s, but futures spreads show no urgent concern on their part about obtaining supplies, so this remains a mostly bearish environment for corn prices. The only potentially bullish factor for either corn or soybeans at the moment is La Nina and the lack of rain in the forecasts for southern Brazil and Argentina, but we can't say the situation is serious yet. Western Argentina received some beneficial rain overnight and there is still time for conditions to change. For now, the trend in March corn remains down, but prices are cheap enough that they should be near support. DTN's National Corn Index closed at $3.10 Thursday, priced 41 cents below the March contract and down from its highest price in two months. Early Thursday, there were 464 delivery intentions in December corn. In outside markets, the December U.S. dollar index is up 0.11 after the U.S. Labor Department said non-farm payrolls increased 228,000 in November, more than was expected. The unemployment rate stayed the same at 4.1%.

Soybeans:

January soybeans closed down 2 1/4 cents Friday and were down 4 1/2 cents on the week, pulling back from an earlier challenge of their four-month high after western Argentina received light to moderate rain amounts. The seven-day forecast continues to look mostly dry for southern Brazil and Argentina, but Friday's lower closes in soybeans and soybean meal suggest traders are not yet convinced that this year's crops will be seriously hurt. So far in 2017-18, U.S. soybean shipments have disappointed expectations and are down 11% from a year ago. Early Friday, USDA brought news that 9.8 million bushels (268,000 metric tons) of U.S. soybeans were sold to China and 2.3 mb (63,000 mt) to unknown destinations, both for 2017-18. Another 2.4 mb (66,000 mt) of soybeans were also sold to unknown for 2018-19. If more serious concerns do arise about South America's crops, we would expect to see a more active buying pace from China. So far, the trend remains sideways in January soybeans with traders closely watching South American weather forecasts. DTN's National Soybean Index closed at $9.19 Thursday, priced 73 cents below the January contract and down from its highest price in four months. Friday's delivery intentions for December contracts totaled 189 for soybean meal and 153 for soybean oil.

Wheat:

March Chicago wheat closed down 2 1/2 cents Friday at a new contract low of $4.19. This week's 19 1/2-cent loss will be blamed on Wednesday's higher crop estimate of 30.0 million metric tons from Statistics Canada, but we also have to credit the larger problem that the only buying interest in Chicago wheat for months has come from commercials, taking advantage of wheat's cheap prices. As we can see from futures spreads, commercials have stayed passive in accepting lower bids and have been in no hurry to bid prices higher, contributing to the bearish dynamic that wheat finds itself in this winter. This week's new lows may set bearish noncommercials up for a modest bout of short-covering, but overall, winter wheat futures continue to trend gradually lower while U.S. and global supplies remain plentiful. DTN's National SRW index closed at $3.83 Thursday, priced 39 cents below the March contract and still holding above its August low. DTN's National HRW index closed at $3.63, also holding above its August low. Among December contracts, there were 25 delivery intentions for Chicago wheat and five for K.C. wheat early Friday. December grain futures expire early on Dec. 14.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman