DTN Before The Bell Grain Comments

Row Crops Lower, USDA Report Ahead

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

December corn is down 3/4 cent, November soybeans are down 4 1/4 cents, and December Chicago wheat is up 1/4 cent. At 8 a.m., USDA announced that 20,000 metric tons of soybean oil were sold to unknown destinations for 2015-16. Before the announcement, grains were steady to lower, cautious ahead of Friday's WASDE report.

Other Markets:

Dow Jones: Lower
U.S. Dollar Index: Higher
Gold: Lower
Crude Oil: Higher

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Corn:

December corn was lower early, treading water while the market waits for Friday's WASDE report. Thursday's weather map shows another day of pleasant fall weather across the Corn Belt, nearly ideal for row crop harvest. Exporting corn has become more difficult lately, partly due to the high U.S. dollar. Early Thursday, USDA said that last week's sales and shipments of corn totaled 20.5 and 19.3 million bushels respectively, a bearish combination that may encourage USDA to lower its export estimate on Friday. Dow Jones' survey is expecting to see a drop in corn's ending stocks estimate on Friday, from 1.592 to 1.498 billion bushels. If true, that would support the argument that the Aug. 12 WASDE report marked the low for the year and give prices a better chance to eventually trade above $4.00 again. December corn continues to trade within its sideways range with resistance being challenged at $4.00. DTN's National Corn Index closed at $3.62 Wednesday, above the 200-day average and priced 34 cents below the December contract. In outside markets, the U.S. dollar index is up just .04 after the Labor Department said that last week's jobless claims totaled 263,000, down from 276,000 the previous week.

Soybeans:

At 8 a.m., USDA announced that 20,000 metric tons of soybean oil were sold to unknown destinations for 2015-16. Before the announcement, November soybeans were lower early after USDA said that last week's export sales and shipments of soybeans totaled 47.2 and 34.3 million bushels respectively, but still has a bearish overall pace. Soybean demand continues to be a big question mark in 2015-16 that will be worked out later, but for now, all eyes are on USDA's crop estimate for October, due out Friday at 11 a.m. CDT. Dow Jones' survey expects USDA's estimate to come down from 3.935 to 3.884 billion bushels, but given unofficial comments from around the country, it is hard to believe that the crop isn't actually larger than USDA's current estimate. The building drama almost ensures that Friday's report will be a market-mover and there is a risk that soybeans may see one more leg down before harvest pressure is exhausted. November soybeans remain under bearish pressure, but are holding near their highest price in seven weeks with nervousness ahead of Friday's WASDE report. DTN's National Soybean Index closed at $8.34 Wednesday, below the 200-day average and priced 57 cents below the November contract. There were 14 deliveries of Oct. soybean oil early Thursday.

Wheat:

December Chicago wheat was slightly higher early with wheat prices finding some support from the current state of dry weather in Ukraine, Russia, and Australia. Winter wheat planting here in the U.S. could also use some rain, but so far, there is almost none in the forecast for the week ahead. Not surprisingly, wheat prices received no bullish help from Thursday morning's export sale report. USDA said that last week's export sales and shipments totaled 10.6 and 20.9 million bushels, not enough to come close to USDA's export estimate of 900 million bushels for 2015-16. December Chicago wheat is trading near the upper end of its sideways range, but it is difficult to see any bullish argument for significantly higher prices from here. DTN's National SRW Wheat Index contract closed at $4.61 Wednesday, below the 200-day average and 56 cents below the December contract.

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

FollowTodd on Twitter www.twitter.com\ToddHultman1

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Todd Hultman