DTN Closing Grain Comments

Corn Survives Bearish Shock, Ends Slightly Higher

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

General Comments:

Corn was up 1 1/4 cents in the December contract and up 1 3/4 cents in the July. Soybeans were down 1/2 cent in the January contract and down 1/4 cent in the July. Wheat closed down 5 cents in the December Kansas City contract, down 2 1/2 cents in December Chicago, and down 3/4 cent in the December Minneapolis contract.

The December U.S. dollar index is up 0.56 at 96.37. December gold is down $3.30 at $1,225.40 while December silver is down 14 cents and December copper is down $0.0205. The Dow Jones Industrial Average is up 13 points at 26,195. December crude oil is down $0.89 at $60.78. December heating oil is down $0.0648 while December RBOB gasoline is up $0.0042 and December natural gas is up 0.002.

Corn:

December corn closed up 1 1/4 cents at $3.73 1/2 Thursday, surviving an initial response of selling after USDA increased its estimate of world ending corn stocks from 159.4 million to 307.51 million metric tons (mmt). Yes, that is not a typo and USDA explained that the big jump was based on a revision to China's ending corn stocks, going back to 2007-08. USDA also maintained, however, that China is still no significant exporter of corn so that likely helped to mute the impact of Thursday's bearish surprise. Here in the U.S., USDA lowered its estimate of U.S. ending corn stocks from 1.813 billion to 1.736 billion bushels (bb), a little less than expected, based on a lower yield of 178.9 bushels per acre (bpa). It was a little surprising that USDA lowered its export estimate of corn from 2.475 bb to 2.450 bb when total corn export commitments are up 16% from a year ago. For now, the trend in corn remains up as we head toward a quieter time of year. DTN's National Corn Index closed at $3.36 Wednesday, well above its September low of $3.00 and priced 36 cents below the December contract. In outside markets, the U.S. dollar index is up 0.56 and most commodities were lower. The Federal Reserve kept the interest rate unchanged, as expected after Thursday's meeting, but many expect another hike in December.

Soybeans:

January soybeans closed down 1/2 cent at $8.79, a mild finish after trading as much as 15 cents lower after USDA's numbers was released. USDA increased its estimate of U.S. ending soybean stocks from 885 million to 955 million bushels (mb), more than expected after cutting the export estimate by 160 mb to 1.900 bb. As a tip to this fall's wet weather conditions, the production estimate was reduced from 4.69 bb to 4.60 bb, based on a lower yield estimate of 52.1 bpa. USDA also increased its estimate of world ending soybean stocks from 110.0 mmt to 112.08 mmt. Brazil's crop estimate stayed at 120.50 mmt for 2018-19 while Argentina's was reduced from 57.00 mmt to 55.50 mmt. USDA also reduced its estimate of China's soybean imports from 94.0 mmt to 90.0 mmt, a number that was expected and could have been lower. With plenty of unanswered questions about U.S. soybean demand in 2018-19, soybean prices continue to trade in a sideways range, well above their September low. DTN's National Soybean Index closed at $7.81 Wednesday, priced $0.98 below the January contract and still well above the September low of $7.12. There were 249 delivery intentions of November soybeans issued late Wednesday.

Wheat:

December Kansas City wheat dropped a nickel to $4.97 1/4, a modest response to mostly bearish numbers in Thursday's WASDE report. For the U.S., USDA actually reduced its estimate of ending wheat stocks slightly, from 956 mb to 949 mb. A closer look however, shows wheat exports that deserve a reduction were left unchanged. More importantly, USDA increased its estimate of world ending wheat stocks from 260.2 mmt to 266.71 mmt, partially due to an older revision. Overall, world wheat production is expected to be down 4% in 2018-19 and world ending stocks are expected to be down a little more than 4%. Here in the U.S., it is looking more likely that some winter wheat will not get planted as snow is falling in Kansas on Thursday. As trading in wheat gets quieter this time of year, all three wheat prices remain under pressure, but are holding sideways. DTN's National HRW index closed at $4.70 Wednesday, 32 cents below the December contract and holding above support at $4.50. Similarly, DTN's National SRW index closed at $4.78 Wednesday.

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

Follow him on Twitter @ToddHultman1

(CZ)

Todd Hultman