DTN Closing Grain Comments

Soybeans Higher, Grains Lower After USDA Reports

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

General Comments:

Corn closed down 2 1/2 cents in the March contract and was down 2 1/4 cents in the December. Soybeans closed up 10 1/2 cents in the March and up 12 cents in the November. Wheat closed down 12 3/4 cents in the March Chicago, down 14 cents in the March Kansas City, and down 16 1/4 cents in the March Minneapolis. The March U.S. dollar index is down 0.78 at 90.83. February gold is up $16.40 at $1,338.90 while March silver is up $0.28 and March copper is down 0.0095. The Dow Jones Industrial Average is up 195 at 25,770. February crude oil is up $0.39 at $64.19. February heating oil is up $0.0070, February RBOB gasoline is up $0.0083, and February natural gas is up $0.111.

For the week:

March corn closed down 5 cents and December closed down 4 cents. March soybeans were down 10 1/4 cents while the November was down 1 3/4 cents. March Chicago wheat was down 10 1/4 cents, March Kansas City wheat was down 11 1/4 cents, and March Minneapolis wheat was down 14 cents.

Corn:

March corn closed down 2 1/2 cents at a new contract low of $3.46 1/4, pressured by Friday's higher corn crop estimate and higher-than-expected estimate of Dec. 1 corn stocks. USDA said 14.604 billion bushels of corn were harvested in 2017, based on a higher yield estimate of 176.6 bushels an acre. After deducting 25 million bushels from feed demand, the new estimate of U.S. ending corn stocks in 2017-18 is 2.477 billion bushels or 17% of annual use. This is the highest ending stocks-to-use ratio in 12 years. USDA also said Dec. 1 corn stocks totaled a higher-than-expected 12.516 billion bushels. USDA's estimate of world ending corn stocks also came in higher than expected, at 206.57 mmt (8.13 bb) or 19% of annual use. One thing USDA did not do on Friday was reduce corn's U.S. export estimate and earlier Friday, USDA said 12.6 million bushels (320,000 mt) of U.S. corn were sold to unknown destinations for 2017-18. Friday's numbers added weight to corn's bearish arguments and move the trend in March corn from sideways to down. DTN's National Corn Index closed at $3.15 Thursday, priced 33 cents below the March contract and near its highest price in four months. In outside markets, the March U.S. dollar index is down 0.78 at its lowest spot prices in over three years as Europe continues to show signs of improvement. Earlier Friday, the U.S. Labor Department said consumer prices were up .1% in December and up 2.1% from a year ago, as expected.

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Soybeans:

March soybeans closed up 10 1/2 cents at $9.60 1/2 Friday, showing relief from the week's bearish news after USDA estimated a slightly smaller 2017 soybean crop and posted a slightly smaller Dec. 1 soybean stock total than was expected. USDA said 4.392 billion bushels of U.S. soybeans were harvested in 2017, based on a slightly lower yield of 49.1 bushels an acre. Crush demand was increased by 10 million bushels, but USDA's estimate of export demand was cut by 65 million bushels to 2.16 billion bushels. The result was a higher ending stocks estimate of 470 million bushels or 11% of annual use. USDA's tally of Dec. 1 soybean stocks came in a little lower than expected, at 3.157 billion bushels. USDA's estimate of world ending and midseason soybean stocks increased slightly to 98.57 mmt or 3.62 billion bushels. In Brazil, where China has increased its soybean purchases, USDA expects 77 million bushels of soybean supplies at the end of the current season on Jan. 31, followed by a 110 mmt (4.04 bb) crop in early 2018. Argentina's new-crop estimate was reduced from 57.0 to 56.0 mmt (2.06 bb). In spite of Friday's higher close, the trend in March soybeans remains down. DTN's National Soybean Index closed at $8.79 Thursday, at a new three-month low and priced 71 cents below the March contract.

Wheat:

March Chicago wheat fell 12 3/4 cents Friday to $4.20 1/2, knocked backed to the ground from its highest prices in nearly five weeks after USDA increased its estimate of U.S. ending U.S. wheat stocks from 960 to 989 million bushels. A closer look at the numbers showed a 20 million bushel reduction in USDA's estimate of feed demand, which will be discouraging to producers given wheat's cheap prices. Also, prices were pressured by USDA's estimate of 32.6 million acres of winter wheat plantings. That is slightly lower than 2017 and still the lowest in over a century, but I suspect many were expecting an even lower number. Dec. 1 wheat stocks totaled 1.873 in the U.S., slightly more than expected, but not a surprise, given wheat's slow export pace. USDA's estimate of world ending wheat stocks was down slightly from a month ago, at 268.02 mmt (9.85 bb), even though Russia's crop estimate was increased from 83.0 to 85.0 mmt (3.12 bb). In spite of Friday's sell-off, the trend in winter wheat remains sideways with USDA providing plenty of fundamental reasons to be bearish. DTN's National SRW index closed at $4.01 Friday, priced 32 cents below the March contract and near its highest price in three months. DTN's National HRW index closed at $3.94, near its highest price in five months.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman