DTN Closing Grain Comments

Corn Pushes Higher a Third Day

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

General Comments:

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

The December U.S. dollar index is up 0.36 at 93.85. December gold is down $10.90 at $1,200.40 while December silver is up 1 cent and December copper is up 0.1045. The Dow Jones Industrial Average is up 76 points at 26,733. November crude oil is up $0.41 at $70.73. November heating oil is down $0.0041 while November RBOB gasoline is down $0.0007 and November natural gas is up $0.013.

For the week:

December corn closed up 5 1/2 cents and July was up 5 cents. November soybeans were up 16 3/4 cents while the July was up 17 1/2 cents. December Chicago wheat was up 10 1/4 cents, December Kansas City wheat was up 9 cents, and December Minneapolis wheat was up 10 1/4 cents.

Corn:

December corn closed up 4 3/4 cents at $3.57 1/4 Friday and was up 5 1/2 cents on the week, magically turning Tuesday's bearish gloom into a sigh of relief among growers, hoping to see evidence of the increased world demand USDA has been talking about. This year's big harvest estimate of 14.83 billion bushels (bb) was likely shaved by this week's excess rains in northern Iowa and southern Minnesota and the flooding left behind, but the overall outlook is still for a big corn crop ahead. On the demand side, interest in U.S. corn exports is off to a good start, thanks to this year's smaller crops out of Brazil and Argentina. USDA said early Friday 4.8 million bushels (mb) (121,700 metric tons) of U.S. corn were sold to unknown destinations for 2018-19. Given the bearish mood surrounding Tuesday's new crop low and the expectation for better U.S. corn demand in 2018-19, this week's low in corn is a good contender for possibly being the seasonal low of 2018. For now, the trend in December corn remains sideways. DTN's National Corn Index closed at $3.09 Thursday, up from this year's low and 44 cents below the December contract. In outside markets, the December U.S. dollar index is up 0.34, back-tracking from Thursday's curious sell-off and anticipating a quarter-percent rate hike on Wednesday.

Soybeans:

November soybeans ended down 3 cents at $8.47 1/4, but was up 16 3/4 cents on the week, bouncing back from its lowest cash prices in 11 years with help from this week's flooding concerns in the north-central Midwest. Friday's showers fell around Oklahoma, while the central and northern Midwest got a break from the rain and also only have light amounts expected the next seven days. In the big picture, the U.S. will still have a record crop this fall and trade concerns with China don't appear to be going away anytime soon. The overall outlook for U.S. soybean prices is still bearish, but 11-year lows for cash soybeans should not have a lot of downside potential. One bright spot for soybean demand this year, thanks to Argentina's drought has been in soybean meal where U.S. exports are up 19% in 2017-18 from a year ago. Early Friday, USDA said 100,000 mt of soybean meal was sold to unknown for 2018-19. For now, November soybean prices continue to experience harvest pressure while the trend remains sideways. U.S. trade policy remains a bearish factor for soybeans, but could change on a dime -- making price behavior nervous and even more difficult to predict than usual. DTN's National Soybean Index closed at $7.47 Thursday, up from its lowest price in eleven years and priced $1.03 below the November contract -- the weakest basis in at least 11 years.

Wheat:

December Chicago wheat was down 2 1/4 cents Friday at $5.21 3/4, but held on to a 10 1/4 cent gain for the week, helped by commercial buying and concerns of dry planting weather in Europe and Russia. Winter wheat planting likely took the day off in Oklahoma Friday as moderate to locally heavy rains blanketed the surrounding area and even present a risk of flash flooding later Friday. Knowing winter wheat, it will survive Friday's weather and many more events this winter, provided enough moisture keeps the southwestern Plains out of drought into next spring. As for the world's 2018 crops, we saw several regional weather challenges through the year and may see more crop adjustments in the next few WASDE reports. World wheat supplies will be down in 2018-19, but the big question is, will U.S. wheat exports be up? So far, the evidence is not convincing that they will with shipments down 31% from a year ago. For now, the trends in all three wheats remain sideways and erratic, very close to where they would be expected to trade in a normal year. DTN's National SRW index closed at $4.78 Thursday, 46 cents below the December contract and up from its lowest close in two months. DTN's National HRW index closed at $4.86 Thursday, also up from its lowest close in two months.

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

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(CZ)

Todd Hultman