DTN Closing Grain Comments
Ag futures and row crops specifically were generally on the lower side on Wednesday, but still within their recent trading ranges as traders aren't really looking to commit to big position swings ahead of USDA insight into the markets on Friday. Outside markets were mixed with energy futures higher after a fresh wave of geopolitical uncertainty after Poland reportedly shot down Russian drones in their airspace Tuesday night. Meanwhile, stock indices were mixed with the S&P 500 surging to a new record amid a cool reading of the PPI Index on Wednesday, the Federal Reserve's favorite inflation gauge for guiding rate decisions, leaving less doubt in investors' minds that the Fed will cut rates in their meeting next week.
(DTN illustration by Nick Scalise)
GENERAL COMMENTS:
December corn closed down 2 3/4 cents and March corn was down 3 cents. November soybeans closed down 6 cents and January soybeans were down 5 3/4 cents. December KC wheat closed down 3 1/4 cents, December Chicago wheat was down 5 1/4 cents, December MIAX Minneapolis wheat was down 4 1/2 cents.
The U.S. Dollar Index is down 0.04 at 97.75. The Dow Jones Industrial Average is down 223.0 points at 45,534.0. December gold is up $5.80 at $3,688.0, December silver is up $0.32 at $41.66 and December copper is up $0.0465. October crude oil is up $1.09 at $63.72, October ultra-low sulfur diesel is up $0.0148, October RBOB gasoline is up $0.0163 and October natural gas is down $0.084.
CORN:
December corn futures traded down 2 3/4 cents on Wednesday, closing at $4.17. March futures were down 3 cents to $4.34 1/2. It was a generally slow news day for the corn market as traders are really just treading water ahead of the USDA report due out on Friday. Price held above the 50-day moving average near $4.14, which remains the immediate support for the board. To the upside, resistance near $4.26 1/4 currently is the bullish objective in my mind, with a close above that level opening the door to higher prices. Otherwise, the 50-day average will continue to face heavy pressure from the upside amid the record large U.S. crop likely incoming this fall.
In demand news on Wednesday, the Energy Information Administration released their Petroleum Status Report printing ethanol production for the week ending Sept. 5 at 1.105 million barrels per day. This marks a 30,000 barrel per day increase from the previous week and is the highest weekly average production since the second week of June. Meanwhile, ethanol stocks rose fractionally week over week but are lower compared to last year by 3.7%. Ethanol prices per gallon have been on the rise with Monday’s USDA Co-Products report estimating the value of a bushel of corn processed into ethanol in the Eastern Corn Belt at $7.52, up 61 cents from the previous week and up almost a dollar from the same point in 2024, for a gross margin of $3.59 per bushel. Indicating there is a lot of economic incentive for ethanol plants to keep a healthy grind. Although it’s not uncommon to see some plants take maintenance downtime in September ahead of the bulk of U.S. harvest.
In Corn Belt weather, the next week offers some chances for rainfall across the Eastern Corn Belt, with two-week totals forecasted in the half to one inch area. The DTN corn weighted precipitation, which looks at the entire Corn Belt is forecasting that in two weeks, September precipitation will be 94% of the 2024 observation, but only 50% of the 20-year average, with the Eastern Corn Belt likely leading that deficit.
The DTN National Corn Index finished Tuesday at $3.78. Wednesday’s futures close and implied corn basis of 41 cents under the December board would indicate the Index on Wednesday afternoon to be near $3.75.
SOYBEANS:
November soybean futures fell on Wednesday to $10.25 1/4, down 6 cents. January futures fell as well to $10.44 3/4, down 5 3/4 cents. Soybean prices retreated at midweek back toward the bottom of the range established over the past five sessions. The 50-day moving average at $10.24 managed to hold support when tested, however, in an optimistic technical sign despite the overall lower session.
In additions to nervousness regarding soybean demand within the export market, the last week has raised some flags in the eyes of the market as the policy dispute between officials from oil refining states and agricultural states regarding the June EPA biofuel proposals has heated up, with those from heavy oil production states calling for reduced renewable obligations. The soybean oil December contract has dropped over 4 cents per pound since its Aug. 22 recent high close the legal battle for its place within the biofuel mix is ongoing. For Wednesday anyway, December soybean oil was slightly higher, with the firmer crude market helping. The U.S. soybean crush program will be extremely important in keeping demand in the soybean market solid with exports expected to decline through 2025-26. The biofuel industry is an important demand source for oil that will require monitoring as we move forward.
For Friday’s WASDE, USDA is expected to cut the national soybean yield estimate after a dry August for the Eastern Belt. However, traders will be interested to see if USDA further reduces the soybean export outlook with still no sales to China. I tend to think the estimate, which has already been reduced by 110 million bushels since June, is reasonable given what we know now. Time will tell and Thursday’s export sales data from USDA may offer further clues here.
The DTN National Soybean Index finished Tuesday at $9.53. Wednesday’s futures close and implied soybean basis of 77 cents under the November board would indicate the Index on Wednesday afternoon to be near $9.47.
WHEAT:
December Kansas City wheat futures fell 3 1/4 cents on Wednesday to $5.07. Since the technically driven 12 cent pop in December KC prices on Monday the market has again slumped back toward the $5.00 level, which has been stout support through the summer thus far. There is currently resistance at the 20-day moving average near $5.17 3/4, which is the bullish objective in the short-term after a failure there on Monday and Tuesday. Chicago and Minneapolis futures were lower for Wednesday as well.
Friday’s USDA report should be a quiet affair for wheat, with the Small Grains Summary at the end of the month the more significant report for U.S. wheat production estimates. However, on the world market balance sheets, there may be some adjustments to world crops, which have been mostly rising in output over the past one to two months. U.S. wheat exports remain ahead of pace as well, which is an opportunity to see some relief to the six-year high ending stocks forecast currently figured into the USDA balance sheet. The International Grains Council weekly update showed U.S. Gulf offers losing competitiveness to Russian and European offers, which may be a trend to watch in conjunction with USDA export data on Thursday morning.
Wheat weather is currently leaning bearish in the U.S. Southern Plains as the last 30 days have featured above-average rainfall across Kansas and Oklahoma. Meanwhile, soil moisture levels are in a much better position as compared to 2024. Looking across the globe, however, there are some potential issues with the Black Sea notably dry over the past 30 days, which has benefited harvest efforts, but producers there may be looking for some rainfall ahead of planting of next year’s winter wheat crop.
The DTN National HRW Index finished Tuesday at $4.33, while the DTN National HRS Index was at $5.19. Wednesday’s futures closes and implied basis of 77 cents under the December board for HRW, and 55 cents under the December board for HRS, would indicate the indices for Wednesday afternoon to be near $4.30 and $5.14, respectively.
Rhett Montgomery can be reached at Rhett.Montgomery@dtn.com