DTN Closing Grain Comments

Grains Falter, Lacking Export Sales

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

General Comments:

Corn was down 7 1/4 cents in the December contract and down 6 3/4 cents in the July. Soybeans were down 8 1/2 cents in the November contract and down 8 1/2 cents in the July. Wheat closed down 10 1/2 cents in the December Kansas City contract, down 12 1/4 cents in December Chicago and down 9 cents in the December Minneapolis contract.

The December U.S. dollar index is up 0.29 at 96.47. December gold is up $0.70 at $1,231.80 while December silver is down 4 cents and December copper is down $0.0005. The Dow Jones Industrial Average is up 374 points at 24,957. December crude oil is up $0.66 at $67.48. December heating oil is up $0.0250 while December RBOB gasoline is down $0.0080 and December natural gas is up 0.037.

Corn:

December corn fell 7 1/4 cents to $3.61 Thursday with more noncommercial liquidation likely after another week of disappointing corn export sales. USDA said last week's export sales and shipments of corn totaled 13.8 million bushels (mb) and 47.8 mb respectively, putting total commitments up 32% in 2018-19 from a year ago. The paces versus a year ago are still bullish for both shipments and total commitments, but the recent drop in corn sales is unnerving at a time when U.S. corn is well-positioned to benefit from increased world demand. The recent sales weakness may be short-term, but one of the problems may also be that world demand is less than USDA expected. Another recent concern for corn prices is that poor quality soybeans sold off as cheap feed will compete with domestic corn demand in 2018-19. Light to moderate rains in the central and western Midwest may interrupt harvest Thursday, but the five-day outlook is mostly dry for the Midwest, excluding Minnesota. In spite of the recent pull-back in prices, the trend in corn remains up, well above its September low. DTN's National Corn Index closed at $3.27 Wednesday, well above its September low of $3.00 and priced 41 cents below the December contract. In outside markets, the U.S. dollar index is up 0.29, challenging its 2018 high.

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Soybeans:

November soybeans closed down 8 1/2 cents at $8.41 3/4 Thursday, pressured by another bearish weekly export sales report from USDA. Early Thursday, USDA said last week's export sales and shipments of soybeans totaled 7.8 mb and 40.8 mb respectively, showing again another lack of current interest for U.S. soybeans. Total soybean export commitments are now down 26% in 2018-19 from a year ago and actual shipments are down 35%. Egypt was last week's top buyer and China was responsible for 2.2 mb (60,000 metric tons) of sales reductions. While China's refusal to buy is no surprise at this point, it is curious that the increase in soybean sales we saw to other countries in July and August are not showing up yet in September or early October. Meanwhile, southeastern soybean states are getting more unwelcome rain on Thursday and have more expected the next five days while the central Midwest is anticipating mostly light rain. The trend in soybeans is back to sideways, still holding above its September low. DTN's National Soybean Index closed at $7.51 Wednesday, priced $0.99 below the November contract and still well above the September low of $7.12.

Wheat:

December K.C. wheat dropped another 10 1/2 cents to $4.86 1/2 Thursday, the lowest close in 2018. December Chicago wheat also followed with a 12 1/4 cent drop to its lowest close since January. The seven-day forecast looks mostly favorable for more winter wheat planting, the December U.S. dollar index is trading higher again, near its highest price in 2018, and the U.S. continues to struggle with exports. Earlier Thursday, USDA said last week's export sales and shipments of wheat totaled 16.3 mb and 14.7 mb respectively, another bearish showing for the week. USDA estimates over a billion bushels of exports in 2018-19, but with exports now down 22% from a year ago, the U.S. will do well to reach last year's 901-mb total, meaning that U.S. ending wheat stocks are apt to be comfortably above 1 billion bushels (bb) in 2018-19. Both Chicago and Kansas City wheat have now broken new lows, turning their trends down and adding further pressure on noncommercials to liquidate. The trend in December Minneapolis wheat remains sideways. Chicago and Minneapolis wheat remain in sideways trends. DTN's National HRW index closed at $4.61 Wednesday, but likely fell to new lows on Thursday, trading 36 cents below the December contract. Similarly, DTN's National SRW index closed at $4.62 Wednesday.

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

Follow him on Twitter @ToddHultman1

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Todd Hultman