DTN Grain Close: Markets Sink Lower as Rain Comes to Brazil

Grain elevator and train at Canton, Kansas Photo: K-State Research and Extension - Creative Commons

January soybeans dropped 14 cents to a new one-month low Monday as Brazil’s crops received rain over the weekend with more on the way the next seven days. December corn closed down 4 cents, pressured by Friday’s cuts to USDA’s corn demand estimates.

 

Midday: Corn is 2 to 3 cents lower, soybeans are 9 to 10 cents lower and wheat is 2 cents lower to 3 cents higher at midday.

CORN

Corn trade is 2 to 3 cents lower at midday with spillover pressure from soybeans and outside market uncertainty, along with harvest pressure moving trade back to the lower end of the range to start the week. The weekly USDA Crop Progress and Export Inspections reports are delayed due to Veterans Day as well.

In the USDA reports Friday, yield declined 1.4 bushels per acre (bp) to 167.0 bpa with acres unchanged to put production at 13.661 billion bushels (bb), down from 13.779 bb last month vs. expectations of 13.575 bb, and carryout at 1.91 bb vs. 1.799 bb expected with reductions to exports and ethanol. Harvest will be slowed the first part of the week with a cold front bringing some snow before the weather opens up again the second part of the week.

Ethanol margins remain stable. Ethanol futures are slightly higher to start the week, helping to support blenders with unleaded still near the recent highs. Basis should see more pressure as harvest progresses as we move to the back half nationally. South America should see areas of improvement as planting progresses.

On the December contract, support is the $3.71 lows from October, with resistance the spike high from Friday at $3.83 3/4.

SOYBEANS

Soybeans are 9 to 11 cents lower at midday with Hong Kong unrest raising trade anxieties again, with little fresh bullish news. Meal is $2.50 to $3.50 lower, with oil narrowly mixed. In Friday’s USDA reports, yield and production were unchanged at 46.9 bpa and 3.55 bb, and carryout was raised to 475 million bushels (mb) from 460 mb last month. The real has surrendered all of the recent gains again after the release of former Brazilian President Luiz Inacio Lula da Silva, hurting U.S. competitiveness.

Bean basis should see pressure start to fade. South America should make more progress through the week with improved weather, and Brazil heading toward the planting homestretch. On the January chart, support is $9.00 after trade broke below the lower Bollinger Band at $9.22 this morning.

WHEAT

Wheat trade is 2 cents lower to 3 cents higher with spillover from the row crops pressing trade back into support levels to start the week and KC finding some buying interest during the day session. The Chicago/KC December spread is 85 cents with narrower action, and now about 15 cents from the recent highs.

The corn/hard red winter wheat spread has widened back to 50 cents, keeping wheat out of rations. Russian values remain elevated with Australia dry, but the U.S. is still struggling to capture a larger share, with the dollar remaining at the upper end of the range. The WASDE report showed carryout at 1.014 billion bushels, down from 1.043 bb last month.

The December KC chart support is the 20-day at $4.23, which we are around at midday, then the lower Bollinger band at $4.15 below that. The upper Bollinger band at $4.32 as resistance.

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