DTN Closing Grain Comments

Corn, Wheat Get Help From USDA Report

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

General Comments:

Corn was up 5 3/4 cents in the September contract and up 6 cents in the December. Soybeans were up 3/4 cent in the August contract and up 1 cent in the November. Wheat closed up 12 3/4 cents in the September Chicago contract, up 7 1/4 cents in the September Kansas City and up 5 cents in the September Minneapolis contract.

The September U.S. dollar index is up 0.05 at 94.54. August gold is up $3.10 at $1,247.50, while September silver is up 19 cents and September copper is up $0.0330. The Dow Jones Industrial Average is up 185 points at 24,885. August crude oil is up $.02 at $70.40. August heating oil is up $0.0205 while August RBOB gasoline is up $0.0112 and August natural gas is down 0.026.

Corn:

December corn closed up 6 cents at $3.59 1/4 Thursday, helped by a lower-than-expected estimate of U.S. ending corn stocks. USDA estimated new-crop ending stocks at 1.552 billion bushels, based on a 14.23 billion bushel crop and the same yield of 174.0 bushels an acre. That was less than the 1.73 billion bushels Dow Jones' survey expected, and did not show the demand reductions implied by USDA's report of June 1 corn stocks. USDA also reduced its estimate of world ending corn stocks for 2018-19, from 154.69 to 151.96 mmt (5.98 bb). Most of the reduction came from a 3.6 mmt increase in the estimate of world corn demand. Also speaking of demand, USDA said earlier that last week's export sales and shipments of corn totaled 15.8 and 55.0 million bushels respectively, a neutral showing for the week that has total shipments down 4% in 2017-18 from a year ago. There were also 5.0 million bushels of new-crop sales. In spite of Thursday's more bullish numbers from USDA, the trend remains down for December corn. DTN's National Corn Index closed at $3.09 Wednesday, a new low in 2018 and 31 cents below the September contract. There were 249 delivery intentions for July corn early Thursday. In outside markets, the September U.S. dollar index is up 0.05 and holding firm while most other commodities are trading higher.

Soybeans:

November soybeans finished the day up a penny at $8.49 1/4, a mild reaction to a bearish USDA report. USDA increased its estimate of U.S. ending soybean stocks for 2018-19 from 385 to 580 million bushels, largely due to a 250 million bushel reduction in the export estimate, related to China's 25% soybean tariff against the U.S. Other minor tweaks included increased crush estimates for both old-crop and new-crop soybeans, but nothing matched the change in exports. The higher estimate of U.S. ending stocks also impacted USDA's world estimates, leading to an increase in world ending soybean stocks, from 87.02 to 98.27 mmt (3.61 bb). Also adding to the bearishness, USDA increased Brazil's new-crop estimate from 118.0 to 120.5 mmt (4.43 bb), expecting a larger soybean planting in the fall. Earlier Thursday, USDA said last week's export sales and shipments of soybeans totaled 5.8 and 27.0 million bushels respectively, a neutral combination that has total shipments down 6% in 2017-18 from a year ago. New-crop sales totaled 10.0 million bushels. So far, the trend remains clearly down for soybeans with trade issues an ongoing concern. DTN's National Soybean Index closed at $7.74 Wednesday, at its lowest price in over nine years and priced 59 cents below the August contract. Among July contracts, delivery intentions totaled 313 for soybeans, 782 for soybean oil, and still none for meal early Thursday. 640 July soybean meal contracts were open as of early Thursday, ahead of Friday's expiration.

Wheat:

September Chicago wheat closed up 12 3/4 cents and September K.C. wheat was up 7 1/4 cents to $4.81 1/4 Thursday, possibly helped by USDA's lower estimate of world ending wheat stocks for 2018-19. USDA dropped that estimate from 266.16 to 260.88 mmt (9.59 bb), representing a 5% drop from the previous season. Here in the U.S., USDA increased the ending wheat stocks estimate for 2018-19 from 946 to 985 million bushels, largely due to a higher production estimate of 1.881 billion bushels. Even this year's drought in the southwestern U.S. Plains is not taking much off last year's 1.10 billion bushel wheat surplus. USDA optimistically raised this season's export estimate from 950 to 975 million bushels, but it is difficult to find any justification for that. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 5.0 and 10.5 million bushels respectively, another bearish showing for the week. After one month in the new season, wheat shipments are down 45% from a year ago -- and last year was not a good year for wheat exports. For now, the trends for all three wheat futures remain down. DTN's National SRW index closed at $4.47 Wednesday, a new two-month low and 25 cents below the September contract. DTN's National HRW index closed at $4.47, near the lower end of its two-month trading range. Trading in July wheat contracts has become dangerously thin and delivery intentions totaled 43 for K.C. wheat and one for Chicago, but none Minneapolis wheat early Thursday. July grain futures expire early on Friday.

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

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Todd Hultman