DTN Closing Grain Comments

USDA Bets on Higher Corn Exports

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

General Comments:

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

The March U.S. dollar index is up 0.56 at 90.16. April gold is down $5.90 at $1,321.70 while May silver is down 1 cent and May copper is down $0.0595. The Dow Jones Industrial Average is down 15 points at 24,786. April crude oil is down $0.86 at $60.29. April heating oil is down $0.0101 while April RBOB gasoline is down $0.0377 and April natural gas is down $0.019.

Corn:

May corn closed up 6 1/4 cents Thursday after USDA lowered its estimate of U.S. ending stocks from 2.352 billion bushels (bb) to 2.127 bb for 2017-18, which was lower than was expected. The drop came from a 50 million bushel (mb) increase in the estimate of ethanol demand and a 175 mb increase in export demand. The export increase will turn heads and comes at a time when U.S. corn shipments are down 28% from a year ago, but USDA is banking on a big boost from Argentina's drought problems, a bet that will need to be proven. Earlier Thursday, USDA said 4.3 mb (110,000 metric tons) of U.S. corn were sold to Japan for 2017-18. USDA also reduced its estimate of world ending corn stocks from 203.1 million metric tons to 199.2 mmt (7.8 bb), helped by a 6-mmt increase in world demand. Fundamentally, corn prices got a little help from USDA's new estimates and the trend remains up in May corn. DTN's National Corn Index closed at $3.51 Wednesday, priced 36 cents below the May contract and near its highest price in seven months. There were 178 delivery intentions for March corn early Thursday. In outside markets, the March U.S. dollar index is up 0.56 while commodities are mostly lower.

Soybeans:

May soybeans ended down 1 1/4 cents even though USDA increased its estimate of U.S. ending stocks from 530 mb to 555 mb, which was more than expected due to a drop in the export estimate. On the other hand, USDA reduced its estimate of world ending soybean stocks from 98.1 mmt to 94.4 mmt (3.5 bb), largely due to Argentina's soybean crop going from 54.0 mmt to 47.0 mmt (1.7 bb). USDA's estimate of Brazil's soybean crop was increased from 112.0 mmt to 113.0 mmt (4.2 bb), near last year's record, but not as large as some private estimates have been. Fundamentally, soybean prices have bearish risk in the March 29 report of Prospective Plantings, but technically, the trends remain up in May soybeans and meal thanks to Argentina's drought in early 2018. DTN's National Soybean Index closed at $9.86 Wednesday, near its highest price in over a year and priced 79 cents below the May contract. Early Thursday, there were no delivery intentions for March contracts of soybeans, 135 for meal, and 85 for bean oil.

Wheat:

May Chicago wheat ended up 2 cents and May Kansas City wheat was down 1 cent, neither showing much response to Thursday's bearish WASDE report. USDA increased its estimate of U.S. ending wheat stocks from 1.009 bb to 1.034 bb, which was more than expected after the export estimate was cut 25 mb. The export reduction was no surprise, but this report did not show new-crop estimates that the market is already trading on as extreme drought appeared again in Thursday's U.S. Drought Monitor in the southwestern U.S. Plains. USDA also increased its estimate of world ending wheat stocks from 266.1 mmt to 268.9 mmt (9.9 bb), more than expected and due to a 2-mmt drop in India's wheat demand. The more important feature for wheat prices these days is the seven-day forecast, which remains mostly dry for the southwestern Plains. Fundamentally, there is still plenty of wheat in the world, but technically, the trends remain up in Chicago and K.C. wheat with some traders still short in a drought. DTN's National SRW index closed at $4.62 Wednesday, down from its highest price in seven months and priced 35 cents below the May contract. DTN's National HRW index closed at $4.87, down from its highest price in over two years. Early Thursday, there were four delivery intentions for March K.C. wheat.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

Todd Hultman