DTN Closing Grain Comments

Grains Survive Friday's Numbers With Mixed Closes

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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General Comments:

March corn closed down 2 1/4 cents per bushel and December corn was down 1 cent. March soybeans closed up 1 1/4 cents and November soybeans were up 1 1/4 cents. March K.C. wheat closed down 2 cents, March Chicago wheat was up 4 cents and March Minneapolis wheat was up 4 cents. The March U.S. dollar index is trading up 0.136 at 96.425. The Dow Jones Industrial Average is down 144.71 points at 25,024.82. April gold is up $3.60 at $1,317.80, March silver is up $0.09 at $15.80 and March copper is down $0.0205 at $2.8080. March crude oil is up $0.08 at $52.72, March heating oil is up $0.0088, March RBOB is up $0.0176 and March natural gas is up $0.036.

For the week:

March corn closed down 4 cents and December 2019 corn was down 3 cents. March soybeans were down 3 1/4 cents while November 2019 soybeans were down 1/4 cent. March Kansas City wheat was down 14 1/2 cents, March Chicago wheat was down 7 cents, and March Minneapolis wheat was down 7 cents.

Corn:

March corn closed down 2 1/4 cents at $3.74 1/4 Friday and finished the week down 4 cents after USDA released several new estimates on Friday. First, USDA's estimate of U.S. ending stocks was reduced from 1.781 billion to 1.735 billion bushels (bb). The 2018 corn crop was estimated at 14.420 bb, based on a final yield of 176.4 bushels per acre on a slightly lower 81.7 million acres. World-ending corn stocks saw a small increase, from 308.80 mmt to 309.78 mmt after Argentina's crop estimate was increased from 42.5 mmt to 46.0 mmt. A small bullish surprise showed up in the Dec. 1 corn stocks total, which USDA estimated at a lower-than-expected 11.952 bb. The lower inventory confirmed first quarter corn demand hit a new record high of 4.86 bb in 2018-19, thanks largely to increased exports. Now that Friday's numbers are out, traders can go back to monitoring South American weather on Monday and next week's trade talks with China. For now, the trend in cash corn remains up, in line with its seasonal tendency. DTN's National Corn Index closed at $3.48 Thursday, down from its highest price in seven months and 28 cents below the March contract. Outside markets are mixed, while the March U.S. dollar index is up 0.14.

Soybeans:

March soybeans survived Friday's USDA reports with a gain of 1 1/4 cents to $9.57 and finished the week down 3 1/4 cents. Friday's numbers were a mixed bag for soybeans after USDA lowered its estimate of U.S. ending soybean stocks from 955 million to 910 million bushels (mb). The 2018 soybean crop was set at 4.544 bb, based on a slightly lower yield of 51.6 bushels per acre and 88.1 million harvested acres. USDA gave soybeans a modest bullish surprise by increasing world demand estimates from the prior two seasons. USDA dropped its estimate of world ending stocks from 115.22 mmt to 106.72 mmt, also getting help from a 5-mmt reduction in Brazil's crop estimate and a slight, 0.5 mmt reduction for Argentina. On the other hand, Dec. 1 soybean stocks were a bearish factor as USDA's 3.736 bb total meant that first-quarter demand was the lowest in six years. After all was said and done, soybeans are still at risk of ending 2018-19 with heavy supplies and face the uncertainty of future trade with China. Technically, the trend of cash soybean prices remains sideways as trade negotiations with China resume next week. DTN's National Soybean Index closed at $8.25 Thursday, staying in a sideways range and $0.88 below the March futures contract.

Wheat:

March K.C. wheat ended down 2 cents at $4.94 1/4 Friday and was also down 14 1/2 cents on the week, struggling to find anything bullish to motivate potential buyers. USDA raised its estimate of U.S. ending wheat stocks for 2018-19, from 974 mb to 1.010 bb, hurt by a reduction in feed demand. USDA slightly reduced its estimate of world ending wheat stocks, from 268.10 mmt to 267.53 mmt for 2018-19, getting help from a 2-mmt increase in its estimate of world wheat demand. Russia's crop estimate was increased from 70.0 mmt to 71.6 mmt, while estimates for most other major producers were unchanged. USDA found 1.999 bb of U.S. wheat on hand as of Dec. 1, meaning that demand in the first half of 2018-2019 fell to its lowest level in nine years. Exports have been more active recently and early Friday Dow Jones reported Egypt bought 300,000 mt of wheat, including 120,000 mt of SRW wheat from the U.S. France and Ukraine were the other suppliers. For cash SRW wheat prices, the trend remains up, while the trends are sideways for cash HRW and HRS wheats. DTN's National HRW Index closed at $4.73 Thursday, down from its five-month high and down 23 cents from the March futures contract. DTN's National SRW Index closed at $4.90 Thursday, also down from its highest price in five months.

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

Follow him on Twitter @ToddHultman1

(CZ)

Todd Hultman