DTN Closing Grain Comments

Risk-On Wednesday Gives Grains Modest Boost

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

General Comments:

March corn was up 3/4 cent and December 2019 corn was up 1 3/4 cents. January soybeans were up 5 1/4 cents and November 2019 soybeans were up 4 3/4 cents. March Kansas City wheat closed down 5 1/2 cents, March Chicago wheat was down 4 1/4 cents, and March Minneapolis wheat was unchanged.

March corn was up 1/2 cent and December 2019 corn was down 1/4 cent. January soybeans were up 5 cents and November 2019 soybeans were up 4 1/4 cents. March K.C. wheat closed up 6 1/2 cents, March Chicago wheat was up 5 1/2 cents, and March Minneapolis wheat was up 7 1/2 cents. The December U.S. dollar index is down 0.29 at 97.07. February gold is up $2.30 at $1,249.50 while March silver is up 20 cents and March copper is down $0.0025. The Dow Jones Industrial Average is up 297 points at 24,667. January crude oil is up $0.29 at $51.94. January heating oil is up $0.0216 while January RBOB gasoline is up $0.0012 and January natural gas is down 0.283.

Corn:

March corn ended up a half-cent at $3.85 1/4 Wednesday, inching higher in spite of USDA's small increase in its estimate of U.S. ending corn stocks on Tuesday. One day after USDA reduced the corn demand estimate for ethanol by 50 million bushels, the U.S. Energy Department said last week's ethanol production dropped from 1.069 million to 1.046 million barrels per day. Ethanol inventory slipped from 23.0 million to 22.9 million barrels. January ethanol prices were up 2.1 cents Wednesday, but are still near their lowest level since 2005 and remain a bearish concern for corn demand. Corn's export pace, on the other hand, remains a bullish factor even though USDA made no changes Tuesday to the export estimate. For now, the trend in cash corn remains up during this quieter time of year, helped by active exports and a reluctance of farmer selling at current prices. The DTN National Corn Index closed at $3.48 Tuesday, near its highest prices in six months and priced 36 cents below the March contract. Outside markets show most commodities trading higher and Dow Jones Industrials up 297 points in active trading, a risk-on day for investors.

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Soybeans:

January soybeans closed up a nickel at $9.20 as traders continue to sift through rumors, looking for any confirmation that China is stepping up its purchases of U.S. ag products, soybeans in particular. At one point, January soybeans were up 13 cents and within a nickel of their July high, before falling back to the smaller gain on the close. USDA did provide a little encouragement early, announcing 4.8 million bushels (130,682 mt) of U.S. soybeans sold to Mexico and another 4.0 million bushels (110,000 mt) sold to unknown destinations, both for 2018-19. Fundamentally speaking, with or without China, the U.S. is headed for a large pile of soybean stocks at the end of 2018-19, possibly over a billion bushels, depending on how South America's new crops play out. So far, South American crops are off to a good start, but Brazil's forecast is drier for the week ahead and Argentina has a chance of heavy, possibly damaging rains. For now, the trend in cash soybeans is up, helped by modest basis improvement in the context of a high-risk trade environment. The DTN National Soybean Index closed at $8.27 Tuesday, near its highest level in four months and priced $0.88 below the January contract.

Wheat:

March K.C. wheat closed up 6 1/2 cents at $5.11 1/4 Wednesday, staying above its November low, but not going anywhere quickly. December wheat contracts are nearly done trading ahead of Friday's official expiration deadline and it is interesting to see Mar/May spreads still looking bullish in Chicago and Minneapolis wheat. Tuesday's WASDE report did not have much to offer wheat prices and the 25 million bushel reduction in USDA's export estimate was long overdue. There still is room for improvement for U.S. wheat exports in the second half of 2018-19, but it is difficult to expect too much in the way of higher HRW wheat prices when U.S. ending wheat stocks could be over a billion bushels in 2018-19 and the Northern Hemisphere is in its dormant season. Even so, there is a chance for a modest off-season rally. The trend for cash HRW wheat has turned sideways after rejecting a new low in November. Cash SRW and HRS prices are trending higher, helped by signs of increased demand. The DTN National HRW Index closed at $4.73 Tuesday, down from a new one-month high and 32 cents below the March contract. The DTN National SRW Index closed at $4.89 Tuesday, down from its three-month high. Trading in December wheat contracts has become dangerously thin, ahead of final trading day on Dec. 14.

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

Follow him on Twitter @ToddHultman1

(CZ)

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Todd Hultman