DTN Closing Grain Comments

Row Crops Respond Higher to USDA Numbers

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

General Comments:

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

The December U.S. dollar index is down 0.45 at 95.01. December gold is up $33.90 at $1,227.30 while December silver is up 26 cents and December copper is up $0.0150. The Dow Jones Industrial Average is down 300 points at 25,599. November crude oil is down $2.25 at $70.92. November heating oil is down $0.0639, while November RBOB gasoline is down $0.0899 and November natural gas is down 0.060.

Corn:

December corn closed up 6 1/2 cents at $3.69 1/4 Thursday, helped by USDA's lower-than-expected estimate of 1.813 billion bushels (bb) of U.S. ending corn stocks for 2018-19, down from 2.14 bb in the previous year. USDA's crop estimate of 14.778 bb was a little less than expected and was based on a lower corn yield of 180.7 bushels an acre. Feed demand was reduced by 25 million bushels (mb), but exports were increased 75 mb, reflecting a strong start in the new season. Earlier Thursday, USDA said a previous sale to unknown was cancelled, amounting to 5.5 million bushels (140,000 mt) of corn. USDA's estimate of world ending corn stocks was increased from 157.0 to 159.35 mmt (6.27 bb), roughly as expected and still down 20% from the previous season. For now, December corn prices are trading sideways, holding well above their September low of $3.42 1/2. DTN's National Corn Index closed at $3.20 Wednesday, up from its September low and priced 43 cents below the December contract. In outside markets, the Dow Jones Industrials were lower again, trading down 189 points in the early Thursday afternoon while most commodities were mixed. November crude oil is trading down $2.04 after Thursday's report showed higher U.S. inventory.

Soybeans:

November soybeans closed up 6 cents at $8.58 1/4 after USDA estimated U.S. ending soybean stocks at 885 mb, roughly as was expected and not as large as some had feared. USDA's new crop estimate of 4.69 bb was unchanged from last month and was based on a higher yield of 53.1 bushels an acre and lower harvested area of 88.3 million acres. Of course, Thursday's estimates do not reflect all the problems we are currently seeing with crops either under water or snow and an accurate harvest estimate may take longer than usual this year. Also, USDA made no changes to the export estimate even though early commitments are down 13% from a year ago. USDA's estimate of world ending soybean stocks was increased from 108.3 to 110.04 mmt (4.04 bb), largely due to revisions in the old-crop season, including a slightly higher crop estimate of 119.80 mmt for Brazil. For now, the trend in November soybeans remains sideways with the September low of $8.12 1/4 holding as potential support. DTN's National Soybean Index closed at $7.51 Wednesday, up from its lowest price in eleven years and priced $1.02 below the November contract, the weakest basis in at least 11 years. Among October contracts, delivery intentions totaled 16 for soybean meal and 38 for soybean oil early Thursday, lighter numbers with plenty of contracts still open on the board.

Wheat:

December K.C. wheat ended down 2 1/2 cents at $5.13 3/4, a mild response to mostly small changes found in USDA's numbers on Thursday. USDA increased its estimate of U.S. ending wheat stocks from 935 to 956 mb for 2018-19, roughly as expected after more wheat was found in the September Grain Stocks report. If there was a surprise, it was that USDA stayed with its export estimate of 1.025 bb, even though wheat shipments are off to a painfully slow start in the new year, down 31% from 2017-18. In the world numbers, USDA lowered its crop estimates for Australia from 20.0 to 18.5 mmt and for Russia from 71.0 to 70.0 mmt, allowing world ending wheat stocks to slip from 261.29 to 260.18 mmt (9.56 bb). Wednesday's widespread selling from investors shook markets up a bit and more was seen Thursday, but one positive for wheat prices is that the December U.S. dollar index is trading down 0.45. For now, December contracts for all three wheats are holding in a sideways range, supported above their July lows. DTN's National HRW index closed at $4.78, up from its lowest price in two months and 38 cents below the December contract. DTN's National SRW index closed at $4.72 Wednesday, also up from its lowest price in two months.

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

Follow him on Twitter @ToddHultman1

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Todd Hultman