DTN Closing Grain Comments

Crop Prices Ease Lower Ahead of Friday's WASDE Report

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

General Comments:

Corn was down 2 cents in the September contract and down 2 1/4 cents in the December. Soybeans were down 6 cents in the August contract and down 6 1/2 cents in the November. Wheat closed down 5 1/2 cents in the September Chicago contract, down 5 3/4 cents in the September Kansas City and down 3 cents in the September Minneapolis contract.

The September U.S. dollar index is up 0.41 at 95.30. December gold is down $1.20 at $1,220.00, while September silver is up 2 cents and September copper is up $0.0125. The Dow Jones Industrial Average is down 1 point at 25,583. September crude oil is down $0.06 at $66.88. September heating oil is down $0.0021 while September RBOB gasoline is down $0.0169 and September natural gas is up 0.002.

CORN:

December corn closed down 2 1/4 cents at $3.82 3/4 Thursday, facing prospects for a higher crop estimate in Friday's WASDE report. Dow Jones' pre-report survey expect USDA to estimate a 14.42 billion bushel corn crop, based on a yield of 176.3 bushels an acre, slightly less than a year ago. Crop ratings are not necessarily reliable, but if one believed them, this year should have a significantly higher yield than last year's 176.6 bushels an acre. There is plenty of room for surprise in Friday's report, but another big corn harvest looks likely this fall. On the demand side, corn export sales totaled 21.8 million bushels old-crop and 25.9 million bushels new-crop. Corn exports are slightly below a year ago with four weeks left in 2017-18. New-crop sales however, are off to a quick start, up 54% from a year ago. USDA is expected to repeat its estimate of lower ending world corn stocks Friday, an important source of support for corn prices moving forward. Technically, the trend in December corn is sideways with a lot we still don't know about this year's crop. DTN's National Corn Index closed at $3.40 Wednesday, up from its lows in 2018 and 31 cents below the September contract. In outside markets, the September U.S. dollar index is up 0.41 after a Wall Street Journal survey of economists predicted 3% GDP growth for the U.S. this year.

Soybeans:

November soybeans closed down 6 1/2 cents at $9.04 with traders also anticipating a higher soybean crop estimate from USDA on Friday. A record high 4.43 billion bushel crop was the average guess among analysts, along with a yield of 49.8 bushels an acre. The survey may be wrong, of course, as we have seen before in August, and that is giving traders a little extra anxiety Thursday. As far as weather is concerned, the seven-day forecast looks great for the eastern Midwest with moderate temperatures and chances for light to moderate rain amounts. The western Midwest, however, looks drier, north of Kansas with hotter temperatures into the weekend. On the demand side, USDA said there were 15.5 million bushels of old-crop soybean export sales and 19.6 million bushels of new-crop sales last week. Soybean shipments are down 3% in 2017-18 from a year ago, a little above USDA's estimated pace. Like corn, new-crop soybean sales are off to a quick start, up 55% from a year ago, but far from being shipped yet. USDA also said Thursday that 135,000 mt of soybean meal were sold to Philippines for 2018-19. For now, the trends are technically higher in both November soybeans and December soybean meal, but a sideways, erratic path may be more likely during this volatile time of year. DTN's National Soybean Index closed at $8.31 Wednesday, up from its lowest price in over nine years and priced 80 cents below the November contract. In August contracts, delivery intentions totaled 668 for soybeans and 486 for soybean oil early Thursday. There have been no delivery intentions yet for soybean meal.

Wheat:

September Chicago wheat closed down 5 1/2 cents at $5.64 1/2 Thursday, influenced by a 1% drop in Europe's price for milling wheat. Europe's forecast has better chances for rain, while the outlook for the northwestern U.S. and western Canadian Prairie remains mostly dry with hot temperatures expected through the weekend. In Australia, drought is being described as the worst in 50 years and is another candidate on the list of regions USDA will likely be reducing crop estimates for on Friday. Dow Jones' survey expects USDA to reduce its estimate of world ending wheat stocks from 260.9 to 255.6 mmt (9.4 bb) Friday. The more important glimpse, however, will be the ending stocks estimates for the major exporters as several areas are encountering dry weather late in 2018. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 11.7 and 12.7 million bushels respectively, another bearish week with no sign yet of the world needing U.S. wheat. With weather concerns active and crop estimates falling, the trends for all three U.S. wheats remain up. DTN's National SRW index closed at $5.42 Wednesday, 28 cents below the September contract and near a new high in 2018. DTN's National HRW index closed at $5.65 Wednesday, also near its highest price in 2018.

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

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Todd Hultman