DTN Closing Grain Comments

U.S., Mexico Strike A Deal; Grains Still Red

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

General Comments:

Corn was down 1 3/4 cents in the September contract and down 1 1/4 cents in the December. Soybeans were down 7 1/4 cents in the September contract and down 7 cents in the November. Wheat closed down 14 cents in the December Chicago contract, down 16 3/4 cents in the December Kansas City, and down 9 3/4 cents in the December Minneapolis contract. The September U.S. dollar index is down 0.36 at 94.70. December gold is up $1.90 at $1,215.20 while September silver is up 3 cents and September copper is up $0.0075. The Dow Jones Industrial Average is up 267 points at 26,057. October crude oil is up $0.14 at $68.86. October heating oil is up $0.0153 while October RBOB gasoline is up $0.0157 and October natural gas is down 0.034.

Corn:

December corn ended down 1 1/4 cents at $3.61 1/2 Monday with beneficial rain in the northern Midwest on Sunday, including Michigan. The seven-day forecast expects moderate to heavy amounts in the central and Eastern Corn Belt while the Western Corn Belt gets light amounts and more-moderate temperatures after Monday. According to Dow Jones, President Donald Trump said a new trade deal has been struck with Mexico, the top customer for U.S. corn. It is a little surprising that corn prices showed no celebration, but they are also weighed down by the anticipation of a big crop. On the demand side, USDA said 49.0 million bushels of corn were inspected for export last week, a decent weekly amount, but not enough if U.S. corn exports are to reach USDA's goal of 2.400 billion bushels for 2017-18. On the other hand, new-crop corn sales are up 61% from a year ago with USDA estimating lower ending world-corn stocks. For now, the trend in December corn remains sideways, struggling with bearish harvest expectations. DTN's National Corn Index closed at $3.16 Friday, holding above its low in 2018 and 32 cents below the September contract. In outside markets, the September U.S. dollar index is down 0.36 and most outside commodities are leaning higher. October lean hogs closed up their 3.00 limit, benefiting from news of the new trade agreement with Mexico.

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Soybeans:

November soybeans were down 17 cents at one point Monday morning, but finished down 7 cents on the day at $8.48 1/4, likely finding limited support from the announcement of a new trade deal with Mexico. Mexico is no China in terms of size of soybean demand, but they are the second largest soybean customer for the U.S. and an important ag customer for several U.S. products. The main concerns weighing heavy on soybean prices are the anticipation of a record U.S. soybean crop and ongoing trade dispute with China. There does not seem to be much argument that this year's soybean crop will be big and that should keep soybean prices depressed into the fall. The trade issue with China does not appear to be budging, but is difficult to predict as talks are likely continuing privately, away from the news headlines. With all the political uncertainty, November soybeans are still trending sideways in a potentially volatile market environment. DTN's National Soybean Index closed at $7.64 Friday, back near its lowest price in over nine years and priced 91 cents below the November contract, the weakest basis in 11 years.

Wheat:

December Chicago wheat fell 14 cents to $5.22 1/2 Monday, the sixth consecutive loss as the bullish enthusiasm from earlier concerns about dry global conditions continues to unwind. It also did not help that the price of December milling wheat in Europe was down 3 3/4 euros or 1.85% Monday. Noncommercials are a likely source of recent selling as Friday's CFTC data showed noncommercial net longs in Chicago wheat dropping from 82,811 to 79,361 as of August 21. Monday's news of a new trade deal with Mexico did not support wheat prices, even though Mexico is the third largest buyer of U.S. wheat so far in 2018-19. Soil moisture has improved in the southwestern U.S. Plains lately, but there is not much rain in this week's forecast while temperatures stay on the hot side. The recent enthusiasm for buying wheat has dissipated and all three wheats are now in sideways weekly trends with noncommercials under bearish pressure. DTN's National SRW index closed at $4.86 Friday, 29 cents below the September contract and down from its high in 2018. DTN's National HRW index closed at $5.00 Friday, also down from its highest price in 2018.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman