DTN Closing Grain Comments

USDA Boosts 2017 Soybean Crop

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

General Comments:

Corn closed down 8 1/2 cents in the December contract and was down 8 cents in the July. Soybeans closed down 9 1/2 cents in the November and down 9 1/4 cents in the July. Wheat closed down 4 cents in the December Chicago, down 6 cents in the December Kansas City, and was down 7 1/2 cents in the December Minneapolis. The December U.S. dollar index is up 0.21 at 94.73. December gold is up $8.40 at $1,195.80 while December silver is up 39 cents and December copper is up 0.0235. The Dow Jones Industrial Average is up 19 points at 26,459. November crude oil is up $1.20 at $73.32. November heating oil is up $0.0281 while November RBOB gasoline is up $0.0246 and November natural gas is down $0.046.

For the week:

December corn closed down 1 cent and July was down 2 cents. November soybeans were down 1 3/4 cents while the July was down 1 3/4 cents. December Chicago wheat was down 12 3/4 cents, December Kansas City wheat was down 14 cents, and December Minneapolis wheat was down 10 cents.

Corn:

December corn fell 8 1/2 cents to $3.56 1/4 Friday, responding to the bearish news of larger-than-expected corn supplies as of September 1. USDA said 2.140 billion bushels (bb) of corn were on hand, down from 2.293 bb a year ago, but above the high of the range of estimates Dow Jones' surveyed analysts were expecting to see. Friday's number suggests a new U.S. ending corn stocks-to-use ratio of 10.2% for October's WASDE report and 2017-18 demand near 14.8 bb, still a new record high. Beyond Friday's report, weather remains a topic of concern for harvest progress with more rain expected after Saturday into next week. More rain fell across Nebraska and Iowa Friday. For now, the trend in December corn remains sideways with prices expected to stay above their September 18 low. DTN's National Corn Index closed at $3.21 Thursday, up from this year's low and 44 cents below the December contract. In outside markets, the December U.S. dollar index is trading up 0.21, staying firm after the Fed raised the federal funds rate on Wednesday and increased its estimate of 2018 GDP to 3.1%.

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Soybeans:

November soybeans dropped 9 1/2 cents to $8.45 1/2 Friday and was down 1 3/4 cents on the week, hurt by USDA's report of higher-than-expected soybean stocks. USDA said 438 million bushels (mb) of soybeans were on hand in the U.S. on September 1, more than the high end of pre-report estimates and up from 302 mb a year ago. Evidently, the high inventory also surprised USDA as they decided to increase the 2017 crop estimate by 19 mb to 4.411 bb, using a higher yield estimate of 49.3 bushels an acre. Even though soybean supplies were higher, total demand for 2017-18 still set a record of 4.277 bb for the year. Fourth quarter demand also hit a new record high of 784 million bushels despite China's tariff. The takeaway here seems to be that China's tariff will not prevent U.S. soybeans from moving at a lower price. Prices will digest Friday's bearish adjustment and Monday's attention will likely turn back toward harvest prospects with rain expected in next week's forecast. For now, the trend in November soybeans remains down, but may be leveling out. DTN's National Soybean Index closed at $7.52 Thursday, up from its lowest price in 11 years and priced $1.03 below the November contract -- the weakest basis in at least 11 years. Among October contracts, delivery intentions totaled 1,092 for soybean oil and 289 for meal early Friday.

Wheat:

December K.C. wheat was down 6 cents at $5.11 1/4, getting no bullish help from Friday's USDA reports. USDA said U.S. wheat inventory totaled 2.379 bb on September 1, more than expected and was up from last year's 2.266 bb. USDA continues to expect a 14% increase in U.S. wheat exports, but that may get revised down on October 11 as first quarter wheat demand came in at 733 mb, the lowest in seven years. There is still hope that U.S. wheat exports may pick up later as world production is 3% to 5% lower this year, but so far, there hasn't been much evidence to support higher exports. Fundamentally, cash winter wheat prices are close to where we would expect in this environment. Technically, the trends in all three wheats remain sideways and erratic. DTN's National SRW Index closed at $4.70 Thursday, 43 cents below the December contract and up from its lowest close in two months. DTN's National HRW Index closed at $4.77 Thursday, also up from its lowest close in two months.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman