DTN Closing Grain Comments

Soybeans Defy Bearish WASDE Report

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

General Comments:

Corn was up 1/2 cent in the March contract and up 1/4 cent in the December. Soybeans were up 4 3/4 cents in the March contract and up 4 cents in the November. Wheat closed down 4 1/4 cents in the March Chicago contract, down 6 1/2 cents in the March Kansas City and up 3/4 cent in the March Minneapolis contract.

The March U.S. dollar index is down 0.04 at 90.09. April gold is up $6.20 at $1,320.80 while March silver is up 16 cents and March copper is down $0.0005. The Dow Jones Industrial Average is down 437 points at 24,456. March crude oil is down $0.69 at $61.10. March heating oil is down $0.0175 while March RBOB gasoline is down $0.0104 and March natural gas is up $0.009.

Corn:

March corn ended up a half cent at $3.65 3/4 after USDA reduced its estimate of U.S. ending corn stocks from 2.477 billion bushels (bb) to 2.352 bb, less than expected and thanks to a 125 million bushel (mb) boost in USDA's export estimate. USDA's estimate of world ending corn stocks fell from 206.57 million metric tons (mmt) to 203.09 mmt, helped by the lower U.S. stocks estimate and a 3-mmt reduction in the corn crop estimate for Argentina. Argentina's crop is now estimated at 39.0 mmt with hot and dry conditions stressing crops again on Thursday. Earlier Thursday, USDA said last week's export sales and shipments of corn totaled 69.7 mb and 37.8 mb respectively, a bearish combination for the week that has total shipments down 29% in 2017-18 from a year ago, but slowly improving. Fundamentally, there is still plenty of corn to weigh on prices, but Thursday's report envisioned a slightly lower surplus, which should help the current seasonal uptrend keep working higher. DTN's National Corn Index closed at $3.35 Wednesday, priced 30 cents below the March contract and at its highest price in six months. In outside markets, the Dow Jones Industrial Average is down 437 points but is not having the same bearish impact on commodity prices as what we saw on Monday.

Soybeans:

In spite of a bearish report from USDA, March soybeans closed up 4 3/4 cents at $9.87 3/4 with traders showing more concern about the current stretch of hot and dry weather in Argentina. For its part, USDA increased the estimate of U.S. ending soybean stocks from 470 mb to 530 mb for 2017-18, all the result of a 60-mb reduction in the export estimate. While 530 mb were more than expected, soybeans' poor export pace was no surprise and was, at least partially, anticipated. USDA's estimate of world ending soybean stocks was lowered from 98.57 mmt to 98.14 mmt after a 2-mmt reduction in Argentina's crop estimate was offset by a 2-mmt increase in Brazil's crop estimate -- in line with the wet/dry split of weather that we have seen this season. Earlier Thursday, Dow Jones reported Brazil's government raised its soybean crop estimate to 111.6 mmt (4.10 bb), close to USDA's new estimate of 112.0 mmt (4.1 bb). USDA said last week's export sales and shipments of soybeans totaled 27.3 mb and 56.5 mb respectively, more than the previous week, but still a bearish concern for prices. Total soybean shipments stayed down 14% in 2017-18 from a year ago. Fundamentally, the anticipation of Brazil's big harvest remains a bearish concern, but technically, March soybean prices remain stubbornly within their sideways trend. DTN's National Soybean Index closed at $9.15 Wednesday, holding in its sideways range and priced 68 cents below the March contract.

Wheat:

March Chicago wheat fell 4 1/4 cents to $4.56 1/4 after USDA increased its estimate of U.S. ending wheat stocks for 2017-18 from 989 mb to 1.009 bb, a little more than was expected. Most of the change was the result of USDA's 25-mb reduction in wheat's export estimate and the cut is not unreasonable in a year when U.S. wheat has plenty of competition. USDA reduced its estimate of world wheat ending stocks from 268.02 mmt to 266.10 mmt, helped by a 3-mmt increase in USDA's estimate of world wheat demand. Earlier Thursday, USDA said last week's export sales and shipments of wheat totaled 14.5 mb and 17.2 mb respectively, another bearish combination that is not making a significant dent in U.S. wheat supplies. Fundamentally, the outlook for wheat remains bearish, but we have to admit that the key numbers are looking backward and don't tell us anything about 2018. In that regard, the trend in winter wheat remains up with dry weather concerns increasing in the southwestern U.S. Plains. DTN's National SRW index closed at $4.31 Wednesday, priced 30 cents below the March contract and at its highest price in six months. DTN's National HRW index closed at $4.39, its highest price in over six months.

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

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Todd Hultman