DTN Closing Grain Comments

Grains Pull Back As USDA Report Nears

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

General Comments:

Corn closed down 4 1/2 cents in the December contract and down 4 1/4 cents in the July. Soybeans closed down 9 3/4 cents in the November contract and down 7 3/4 cents in the July. Wheat closed down 5 1/4 cents in the December Chicago contract, down 4 1/2 cents in the December Kansas City, and down 1 3/4 cents in the December Minneapolis contract. The December U.S. dollar index is down .42 at 95.08. December gold is down $4.70 at $1,144.00 while December silver is down $.33 and December copper is down $.0205. The Dow Jones Industrial Average is up 29 at 16,941. November crude oil is up $1.56 at $49.37. November heating oil is up $.0208 while November RBOB gasoline is up $.0137 and November natural gas is up .023.

Corn:

December corn closed lower Thursday with second thoughts emerging ahead of Friday's WASDE report. Dow Jones' survey expects USDA to estimate this fall's harvest at 13.46 billion bushels, but the range of guesses between 13.1 billion and 13.8 billion bushels shows plenty of uncertainty about Friday's report. Early Thursday, USDA said last week's export sales and shipments of corn totaled 20.5 million and 19.3 million bushels, respectively, a bearish combination that argues for a lower export estimate in 2015-16. December corn continues to trade sideways with obvious resistance at $4.00. DTN's National Corn Index closed at $3.62 Wednesday, priced 34 cents below the December contract and will stay above the 200-day average on Thursday evening. In outside markets, the U.S. dollar index is down .42 after minutes from the latest Fed meeting showed members concerned that recent global developments may have increased downside risks for the economy.

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Soybeans:

November soybeans closed lower Thursday, showing more concern as Friday's report approaches. Dow Jones' survey expects USDA to estimate this fall's soybean crop at 3.88 billion bushels with a yield of 46.9 bushels an acre. Guesses, however, ranged from 3.59 billion to 3.99 billion bushels and anecdotal reports have sounded good for yields, but bearish for prices. USDA's October estimates have a 90% confidence interval of +/-5.1% which is significantly lower than previous reports and is why Friday's numbers will likely tell us if prices have one more shot down or not. Sales and shipments of soybeans last week totaled 47.2 million and 34.3 million bushels respectively, a better weekly pace while the accumulated total is still neutral-to-bearish, down 26% from a year ago. November soybeans have been holding sideways for over six weeks and are about to find out if their seasonal lows are in or not. DTN's National Soybean Index closed at $8.34 Wednesday, priced 57 cents below the November contract and is still below the 200-day average. USDA announced that 20,000 metric tons of soybean oil were sold to unknown destinations for 2015-16. The Shanghai Composite Index was up nearly 3% on Thursday, trading for the first time in October after a one-week holiday.

Wheat:

December Chicago wheat closed lower Thursday, falling back from Wednesday's failed attempt at a new high without a strong bullish argument to support prices. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 10.6 million and 20.9 million bushels respectively, not enough to support USDA's export estimate of 900 million bushels for 2015-16. The sluggish pace of exports is bearish enough, but the U.N.'s Food and Agriculture Organization also estimated world wheat production at 734.8 mmt for 2015-16, above USDA's estimate of 731.6 mmt. Dry weather still remains a modest concern in Ukraine, Russia, and Australia, but is no bullish match for wheat's abundant supplies in 2015-16. December Chicago wheat failed this week's test of resistance and is likely to keep trading sideways with commercial support below $5.00. DTN's National SRW Wheat Index closed at $4.61 Wednesday, priced 56 cents below the December contract and below the 200-day average. DTN's National HRW Wheat Index closed at $4.52 Wednesday, also below the 200-day average.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman