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DTN Closing Grain Comments    09/23 14:03

   Soybean Meal Holds Gain as Grains Trade Lower

   December soybean meal closed at a new two-year high on a day when the rest 
of the grain sector closed lower, pressured by row-crop harvest progress and 
increased chances for rain in Ukraine. The December U.S. dollar index is 
trading at a new one-month high, offering bearish pressure to Wednesday's 
commodity prices.

Todd Hultman
DTN Lead Analyst

   General Comments:

   December corn closed down 3/4 cent, and July corn was down 1 3/4 cents. 
November soybeans closed down 5 1/4 cents, and July soybeans were down 4 1/2 
cents. December KC wheat closed down 7 1/2 cents, December Chicago wheat was 
down 9 cents and December Minneapolis wheat was down 6 3/4 cents. The December 
U.S. Dollar Index is trading up 0.33 at 94.35. The Dow Jones Industrial Average 
is down 376.75 points at 26,911.43. December gold is down $43.80 at $1,863.80, 
December silver is down $1.66 at $22.87 and December copper is down $0.0905. 
November crude oil is down $0.06 at $39.74, November heating oil is up $0.0066, 
November RBOB gasoline is up $0.0091 and November natural gas is up $0.276.

   Corn:

   December corn ended down 3/4 cent at $3.68 1/2 Wednesday, a third day lower 
after hitting a new six-month peak of $3.79 1/4 Friday. Corn prices continue to 
find support from an early count of 859 million bushels (mb) of corn export 
sale commitments in 2020-21, a total that got bigger again on Tuesday with 
sales to China and unknown. It is also helpful and a bullish surprise to see 
Brazil's FOB corn prices at their highest levels in four years in U.S. dollar 
terms and 16 cents above those at the U.S. Gulf. This week, however, started 
with bearish influence from a revival of coronavirus concerns and has stayed 
lower with harvest conditions looking favorable. USDA said Monday 8% of the 
corn crop was harvested, but much has likely been accomplished since then, and 
the seven-day forecast continues to look helpful with warm temperatures and dry 
weather expected. In South America, producers are eager to get planting and 
have been helped by recent showers in southern Brazil. Rain in the forecast for 
central Argentina from Thursday into the weekend is also helpful. On the demand 
side, the U.S. Energy Department said last week's ethanol production slipped 
from 926,000 to 906,000 barrels per day, down 4% from last year's 
lower-than-usual week of production. U.S. ethanol inventory inched up, from 
19.8 million barrels to 20.0 million barrels, which is still near the lowest in 
over three years. Last week's gasoline demand was down 9% from a year ago and 
remains a limiting factor for ethanol production. Fundamentally, it is unusual 
for corn price to trade near its six-month high at harvest time, and producer 
sales are likely being considered. Noncommercials are lightly net long in corn, 
USDA's ending stocks estimate of 2.50 billion bushels (bb) is moderately 
bearish and 14.9 bb of new corn supplies are coming available. Technically, the 
trend in cash corn remains up with resistance likely near Friday's close, the 
same site where prices broke below support back in March. DTN's National Corn 
Index settled at $3.41 Tuesday evening, down from its six-month high and 28 
cents below the December contract. In outside markets, the December U.S. dollar 
index is trading up 0.33 at a new one-month high, and most commodities are 
trading lower.

   Soybeans:

   November soybeans closed down 5 1/4 cents at $10.14 1/2 Wednesday, a third 
day lower with mixed results from soy products. December soybean meal closed up 
$3.60 at a new two-year high of $344.60 with support from noncommercial buying, 
limited distillers grains production and high export taxes in Argentina. 
December soybean oil ended down 0.80 cent and is down sharply from Friday's 
high of 35.49 cents. Earlier Wednesday, USDA said 9.5 mb of U.S. soybeans were 
sold, 4.85 mb going to China and the rest to unknown destinations. It was the 
14th consecutive soybean sale announcement from USDA and now puts export sales 
commitments at a minimum of 1.32 bb, a hot streak that shows no sign of ending 
yet. Meanwhile, Brazil has no meaningful amount of soybean supplies to compete 
for exports with and is eager to get planted. As mentioned above, recent 
showers in southern Brazil will help, but central Brazil needs more rain. Here 
in the U.S., the soybean harvest is picking up across the country and yield 
anecdotes have been mixed. USDA's 4.31 bb crop estimate is probably not far off 
the mark and every bushel will be needed, the way export sales have been going, 
especially from China. The forecast is mostly dry and favorable for harvest the 
next two weeks. Below-normal temperatures are expected to arrive in early 
October, but do not appear to be a significant threat. From a fundamental view, 
higher-than-expected export sales are drawing the soybean surplus lower, and 
the world will be closely watching South America's new growing season. 
Technically, the trend remains up in cash soybeans with possible resistance 
coming from the 2018 high of $10.60 1/2. DTN's National Soybean Index closed at 
$9.64 Tuesday, down from it two-year high and 56 cents below the November 
contract.

   Wheat:

   December KC wheat closed down 7 1/2 cents at $4.84 1/4 Wednesday, keeping a 
defensive tone since Monday's big sell-off took nearly all commodity prices 
lower, including wheat. The irony of Monday's selling was that it was related 
to a resurgence of coronavirus concerns in Europe, and wheat is one of the 
least negatively affected commodities. Markets, including wheat, are emotional, 
however, and it's not uncommon for wheat prices to trade in a choppy pattern, 
as they are doing. In the bigger picture, KC wheat prices have been under 
bearish pressure throughout most of 2020 and hit a trough in early August after 
hearing about the likelihood of another record world crop for months. That 
bearish scenario is still true, but with U.S. winter wheat now being planted 
for next spring, traders are increasingly starting to look ahead to next year 
and are seeing early bullish possibilities. Planting conditions in Ukraine and 
Russia are currently dry, but Ukraine has increased chances for rain in the 
week ahead, another reason for Wednesday's selling. Here in the U.S., planting 
conditions are also generally dry in the western half of the U.S., and La Nina 
conditions are expected to expand drought into the southern U.S. Plains in the 
final quarter of 2020. Argentina has also been experiencing drought but is 
expecting beneficial rains the next five days. From a fundamental view, the 
price outlook for wheat remains bearish, but next year's bullish possibilities 
have helped lift prices and are likely to be a source of support this winter. 
Technically, the trends remain up for all three cash U.S. wheats. DTN's 
National HRW index closed at $4.65 Tuesday, down from the 2020 high of $4.79. 
DTN's National SRW index closed at $5.32, down from a five-month high.

    

    




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