DTN Closing Grain Comments

Planting Woes Spur Grain Prices Higher

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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General Comments:

July corn closed up 16 cents per bushel and December corn was up 17 1/4 cents. July soybeans closed up 26 1/4 cents and November soybeans were up 26 1/4 cents. July KC wheat closed up 18 3/4 cents, July Chicago wheat was up 15 1/4 cents and July Minneapolis wheat was up 9 1/2 cents. The June U.S. dollar index is trading up 0.328 at 97.805. The Dow Jones Industrial Average is down 44.13 points at 25,541.56. June gold is down $5.90 at $1,277.70, July silver is down $0.24 at $14.32 and July copper is down $0.0000 at $2.6995. July crude oil is up $0.46 at $59.09, July heating oil is up $0.0200, July RBOB is up $0.0262 and June natural gas is down $0.013.

Corn:

July corn opened higher Monday evening and never looked back, closing up 16 cents at $4.20 1/4 on Tuesday. Sometimes, markets can return from a three-day weekend to find a different forecast waiting; that was not the case Tuesday. After a weekend of rain in the Western Corn Belt and tornadoes in the Eastern Corn Belt, the seven-day forecast expects moderate to heavy amounts for most of the Midwest. The especially wet states of Illinois to Ohio continue to be targets of more rain as we near the end of May. Earlier Tuesday, USDA said 43.3 million bushels (mb) of corn were inspected for export last week, a little below the 45.2 mb needed each week to reach USDA's export goal by the end of August. Exports are a minor concern right now however, as getting the 2019 crop planted continues to be the main challenge. Tuesday afternoon's Crop Progress report is expected to show corn planting progress in the low 60s, but another important aspect of that is where the corn is being planted as major production areas remain off limits in May. Fundamentally, corn-planting issues in 2019 give corn prices a neutral to bullish outlook with a wide range of uncertainty. Technically, the trend is up and DTN's index of cash corn prices will close at its highest price in nearly three years on Tuesday evening. DTN's National Corn Index closed at $3.77 Friday, 27 cents below the July contract and at its highest level in nearly three years. In outside markets, the June U.S. dollar index is up 0.33 and commodities other than grains are mixed.

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Soybeans:

July soybeans closed up 26 1/4 cents, finishing at $8.56 Tuesday and above last week's range as the National Weather Service posts flash flood watches in Iowa and Illinois and flood warnings in Nebraska and Kansas. Tuesday's higher close is a sign of just how bad planting conditions have become in 2019 as soybeans are not as time sensitive as corn. There is also extra incentive now to get soybeans or other eligible crops planted to qualify for aid from USDA's Market Facilitation Program. Tuesday's rally likely made bearish speculators nervous as noncommercial net shorts are near record levels. Fundamentally, noncommercials still have a strong case to make for lower soybean prices as U.S. ending soybean stocks are expected to exceed a record high 1 billion bushels, hurt by exports that have not kept pace with USDA's estimate. USDA said Tuesday morning that 19.6 mb of soybeans were inspected for export last week, less than the 33.6 mb needed each week to reach USDA's 1.775 billion bushel goal by the end of August. Technically, the trend is still down for soybeans, but the weekly stochastic has turned up, indicating a bullish change in momentum. DTN's National Soybean Index closed at $7.47 Friday, 83 cents below the July contract and up from its lowest price in 12 years.

Wheat:

July KC wheat closed up 18 3/4 cents at $4.60 3/4 Tuesday, the highest close in three months. The seven-day forecast expects more heavy rain amounts in the southwestern U.S. Plains where flooding has already occurred and warnings are posted in Nebraska and Kansas. More heavy rain will also come to the SRW wheat areas in the eastern Midwest where excess moisture has long been a problem this spring. The lack of relief from persistent rain has caught winter wheat crops at a time when USDA handed out its highest good-to-excellent crop ratings in nine years and it will be interesting to see if those ratings come down much Tuesday afternoon. On the other hand, the northwestern U.S. Plains show a drier forecast the next seven days, more favorable for the crops that did get planted. USDA said Tuesday morning that 18.2 mb of wheat were inspected for export last week, on a path that should come close to USDA's 925 mb export estimate when the season ends on Friday. Fundamentally speaking, U.S. wheat supplies are likely to remain bearishly high in 2019-20, but those expectations are being trimmed with the recent interruption of adverse weather. Technically, the trend is now up for all three U.S. wheats, also helped by corn's planting problems. DTN's National HRW Index closed at $4.25 Friday, up sharply from its lowest close in over a year and 17 cents below the July contract. DTN's National SRW Index closed at $4.64, also up sharply from its lowest close in over a year.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman