DTN Closing Grain Comments

Row Crops End Week on Quiet Note

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

General Comments:

Corn closed up 3/4 cent in the December contract and was up 3/4 cent in the July. Soybeans closed up 4 3/4 cents in the November and up 4 1/2 cents in the July. Wheat closed down 2 1/2 cents in the December Chicago, down 2 cents in the December Kansas City, and was down 1 3/4 cents in the December Minneapolis. The September U.S. dollar index is up 0.37 at 95.35. December gold is down $2.70 at $1,201.60 while December silver is up 1 cent and December copper is down 0.0150. The Dow Jones Industrial Average is down 81 points at 25,915. October crude oil is down $0.24 at $67.68. October heating oil is up $0.0078 while October RBOB gasoline is up $0.0191 and October natural gas is up $0.005.

For the week:

December corn closed up 2 cents and July was up 2 1/4 cents. November soybeans were down 1/2 cent while the July was up 3/4 cent. December Chicago wheat was down 34 1/4 cents, December Kansas City wheat was down 38 1/2 cents, and December Minneapolis wheat was down 28 3/4 cents.

Corn:

December corn closed up 3/4 cent at $3.67 Friday and held a 2-cent gain for the week. The week saw heavy rain hit crops in the western and central Corn Belt, the first hit of adverse weather in quite a while. However, traders simply weren't moved to buy, knowing that drier weather is a couple days away and a big fall harvest is still likely. Concerning future corn demand, DTN's Todd Neeley reported on a study from the University of Missouri, which said EPA waivers could reduce domestic ethanol demand by 767 million gallons a year for the next six years. If accurate, that translates to 274 million bushels of corn demand per year. So far, no drop in U.S. ethanol production has taken place, but ethanol prices are near their lowest levels since trading began in 2005. Another concern for corn prices came Friday when President Donald Trump told the Wall Street Journal he did not like the trade terms with Japan. In 2017-18, Japan bought 20% of U.S. corn exports and is widely seen as an important customer of U.S. agriculture. For now, Friday's export sales report from USDA showed new-crop corn sales up 21% in the new season from a year ago. With a big U.S. corn crop likely this fall, the trend in December corn remains sideways with the seasonal low typically seen around early October. DTN's National Corn Index closed at $3.23 Thursday, up from its low in 2018 and 44 cents below the December contract. In outside markets, the yield on 10-year T-notes is up 4 basis points to 2.92% after the Labor Department said nonfarm payrolls were up 201,000 in August, a sign of growth and also roughly as expected. The U.S. unemployment rate remained at 3.9%.

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Soybeans:

November soybeans finished up 4 3/4 cents at $8.44, but were down a half-cent on the week, holding a narrow range on light volume. Trade relations with China continue to be a big concern for U.S. soybean demand (see Friday's column on DTN, "A Soybean Tariff With Many Tentacles") and, on Friday, CNBC.com quoted President Trump as saying he's ready to hit China with another $267 billion of tariffs on top of the $200 billion already proposed, but not yet enacted. If the hostile rhetoric is any judge, a resolution does not appear likely anytime soon, which means any significant rally in soybean prices seems out of the question, especially with a record harvest expected. If there has been any good news for soybeans lately, it's that U.S. soybean exports were only down 2.5% in 2017-18, a time when China's purchases were down 24%. Early new-crop soybean sales are currently down 10% from a year ago with a new season ready to be reported next week. November soybean prices are under extreme bearish pressure and, yet, the trend remains sideways, holding above the July low of $8.26 1/4. U.S. trade policy remains bearish for soybeans, but could change on a dime -- making prices even more difficult to predict than usual. DTN's National Soybean Index closed at $7.41 Thursday, near its lowest price in over nine years and priced 98 cents below the November contract -- the weakest basis in at least 11 years.

Wheat:

December Chicago wheat ended 2 1/2 cents lower at $5.11 1/4 Friday, capping off a 34 1/4 cent loss on the week. Much of the buying enthusiasm seen in early August has vanished as this year's lower global production has yet to give the U.S. any hope of earning more export business. Friday's weekly report from USDA showed last week's export sales and shipments of wheat at 14.0 million and 10.5 million bushels, respectively, another bearish week that put total shipments down 33% from last year's low pace. In the case of Chicago and K.C. wheat contracts, noncommercials are net long and are likely under pressure to liquidate after this week's losses and drop in prices below August's low. Also pressuring prices, more rain fell in the Southern Plains Friday, boosting soil moisture conditions ahead of planting later this month. For now, the trends in all three wheats remain sideways and choppy with the next WASDE report due out Wednesday, September 12. DTN's National SRW index closed at $4.64 Thursday, 50 cents below the December contract and its lowest close in over a month. DTN's National HRW index closed at $4.75 Friday, its lowest close in over a month. September grain futures expire early next Friday, September 14.

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

Follow him on Twitter @ToddHultman1

(CZ)

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Todd Hultman