DTN Closing Grain Comments

Soybeans Fall Back From Highs, Preserve Gain

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

General Comments:

July corn closed down 1 1/2 cents per bushel and December corn was down 1 1/4 cents. July soybeans closed up 16 cents and November soybeans were up 16 cents. July KC wheat closed down 7 1/2 cents, July Chicago wheat was down 14 1/4 cents and July Minneapolis wheat was down 8 3/4 cents. The June U.S. dollar index is trading up 0.168 at 98.010. The Dow Jones Industrial Average is down 291.50 points at 25,056.27. June gold is up $4.20 at $1,281.30, July silver is up $0.10 at $14.42 and July copper is down $0.0315 at $2.6645. July crude oil is down $0.60 at $58.54, July heating oil is down $0.0257, July RBOB is down $0.0205 and July natural gas is up $0.043.

Corn:

July corn hit a high of $4.38 early Wednesday morning, but then fell back, finishing down 1 1/2 cents Wednesday at $4 18 3/4. Late Tuesday, USDA said 58% of U.S. corn was planted on May 26, the slowest progress since at least 1980. The eastern area of Illinois to Ohio plus South Dakota remains especially wet and will need more time before planting will pick up, if it can. The seven-day forecast remains wet for much of the Corn Belt, but the six- to ten-day forecast is starting to look better for planting possibilities in mid-June. All the bearish gloom and heavy noncommercial selling witnessed earlier in May has changed its tune as the market faces the reality of corn either getting planted late or not at all in 2019. The combination of new bullish uncertainty and a reversal of noncommercial short positions has made for a dramatic turnaround in prices. Now traders will be wondering if Wednesday's price action signifies a top, but there is so much we still don't know about this year's crop. Fundamentally speaking, a sharp reduction in U.S. ending corn stocks is a new possibility for 2019-20 and that is supporting corn's higher prices. Technically, the trend is up and DTN's index of cash corn prices will settle near its highest price in nearly three years on Wednesday evening. DTN's National Corn Index closed at $3.93 Monday, 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 trading up 0.18, back near its contract high with an update on U.S. GDP due out Thursday morning. Outside commodities were mixed.

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Soybeans:

July soybeans closed up 16 cents at $8.72 Wednesday, down from its high of $8.92 3/4, but a gain nonetheless. Late Tuesday, USDA said 29% of U.S. soybeans were planted as of May 26, the lowest progress for this time of year since 25% was planted on May 24, 2009. For reference, 2009 ended with a soybean yield slightly above trend at 44.0 bushels so it is possible for soybean crops to still do well if planted late, but soybean acres will likely be down this year and we are still very early in the crop season. The one thing this new weather concern has done for soybeans is caused traders to forget about China, at least temporarily, and the rally has punished bearish speculators who took July prices to their 2008 low. Fundamentally speaking, we can't forget about China or the anticipation of record ending soybean stocks this season, but if we do get evidence of lower-than-expected production in 2019, that would help ease some of soybeans' bearishness coming from the lack of trade. Technically, Wednesday's higher close changed the trend in soybeans to sideways, reflecting the uncertain planting conditions and crop season ahead. DTN's National Soybean Index closed at $7.74 Monday, 82 cents below the July contract and up from its lowest prices in 12 years.

Wheat:

Wednesday saw active trade in July KC wheat with prices up over 20 cents early, but settling down 7 1/2 cents at the end of the day, at $4.53 1/4, a retreat from its highest close in three months. It is no secret the recent corn rally is helping wheat prices trade higher, but winter wheat crops are also not doing as well lately, hurt by excess rain. USDA said 61% of winter wheat was good to excellent as of May 26, down from 66% the week before. Wheat in the northwestern U.S. is doing well, but flooding concerns have emerged in Kansas and Oklahoma. The SRW wheat crop in the eastern Midwest has been consistently wet and remains so now with 33% of Ohio's wheat rated poor or very poor. USDA also said 84% of U.S. spring wheat was planted and 47% was emerged, both trailing their five-year averages. Outside of North America, eastern Australia continues to deal with dry weather and a hotter and drier forecast for eastern Ukraine and southern Russia is expected to stress wheat crops there. Otherwise, no major problems are reported yet. Fundamentally, the world remains on track for higher wheat production in 2019, but the season is still young. Technically, the trend is currently up for all three U.S. wheats, helped by reduced crop conditions and corn's planting problems. DTN's National HRW Index closed at $4.43 Monday, up sharply from its lowest close in over a year and 17 cents below the July contract. DTN's National SRW Index closed at $4.80, 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

(CZ)

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Todd Hultman