DTN Early Word Grains
Crop Prices Fall Back Early Wednesday
July corn is down 9 1/2 cents, July soybeans are down 6 1/4 cents and July KC wheat is down 16 3/4 cents.
CME Globex Recap:Dow Jones futures are trading higher early Wednesday with more talk emerging that the Federal Reserve may cut interest rates in 2019 if trade issues result in slower economic growth. August gold is trading higher and the June U.S. dollar index is modestly lower with the 10-year T-note yielding 2.12%.
OUTSIDE MARKETS:Previous closes on Tuesday showed the Dow Jones Industrial Average up 512.40 at 25,332.18 and the S&P 500 up 58.82 at 2,803.27, while the 10-yr Treasury yield ended at 2.12%. Early Wednesday, DJIA futures are up 166 points. Asian markets are mostly higher with Japan's Nikkei 225 up 367.56 (1.8%) and China's Shanghai Composite down 0.86 points (-0.03%). European markets are steady to higher with London's FTSE 100 up 27.02 points (0.4%), Germany's DAX up 36.95 points (0.3%), and France's CAC 40 up 19.19 points (0.4%). The June Euro is up 0.002 at $1.129 and the June U.S. dollar index is down 0.12 at 96.88. The September 30-Year T-Bond is down 6/32nds, while August gold is up $13.20 at $1,341.90 and July crude oil is down $0.38 at $53.09. Soybeans and meal on China's Dalian Exchange were trading modestly lower.
| BULL | BEAR | ||
| 1) | The latest seven-day forecast is still expecting moderate to heavy rain amounts across much of the Corn Belt, light to moderate amounts in the northwestern Corn Belt. | 1) | President Trump appears determined to raise tariffs on another major U.S. ag customer, Mexico. |
| 2) | There remains a possibility of significant corn production loss in 2019, due to both lost acres and reduced yield. | 2) | Until trade negotiations get rid of China's 25% tariff on U.S. soybeans, U.S. ending soybean stocks will continue to increase beyond current record levels. |
| 3) | This week's rain forecast also brings unwelcome rain amounts to winter wheat areas at a time when USDA said 76% of the wheat is headed. | 3) | The latest winter wheat rally is falling back from three-month highs and world crop conditions are generally favorable at this point in the new season. |
CORN July corn is down 9 1/2 cents early Wednesday as planting activity gets a chance in the Western Corn Belt. Wednesday's weather map has rain falling in the eastern Midwest and in parts of Texas and Louisiana with heavy amounts expected the next seven days in the southeastern Corn Belt. The northwestern Corn Belt has light to moderate amounts expected, giving some areas a better chance to get planted in June. There is much discussion on Twitter about what corn acres and yields will be, but specific guesses are not much help at this point. The main takeaway is that it does not take much acreage or yield loss to significantly reduce ending corn stocks in 2019-20, which means that corn prices still have bullish potential, even though prices are trading lower Wednesday. Also working against corn prices, the White House appears determined to increase tariffs on Mexico on June 10, a major U.S. ag customer. Technically speaking, July corn is finding resistance short of the old 2018 high of $4.45.
SOYBEANS July soybeans are down 6 1/4 cents and July soybean meal is down $2.70 early Wednesday, also encountering resistance after their rallies in late May. In the case of soybeans, there are also legitimate concerns about what soybean acres and yields may end at in 2019, but bearish concerns are so heavy and numerous that it is difficult to expect much higher prices. According to Reuters news, private soybean importers in China are being allowed to apply for tariff waivers this fall, but that is still a restricted prospect for U.S. soybean exports and no substitute for a new trade agreement. Meanwhile, talks with China have ceased and trade tensions with Mexico have returned with the U.S. set to increase tariffs on Mexico on June 10. The pool of available customers for 1 billion bushels of U.S. ending soybean stocks remains limited. Technically, July soybeans are staying below their 100-day average at $9.00.
WHEAT July KC wheat is down 16 3/4 cents early, a second day of lower prices after Monday's brief rally. Scattered light to moderate rain amounts are in the five-day forecast for the southwestern U.S. Plains with heavier amounts expected west of Oklahoma. The latest forecast eases some of the flooding threat in Kansas and Oklahoma, but still makes other wheat crops vulnerable to excess moisture at a time when USDA says 76% of the winter crop is headed. By contrast, winter wheat in the northwestern U.S. is doing very well with light to moderate showers expected the next seven days. In the larger picture, the western Canadian Prairies are expecting helpful rains this weekend and world crop conditions are doing well overall with some limited exceptions. Technically, the recent three-month highs in winter wheat are likely to stand as sources of resistance this summer.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.99 | $0.01 | -$0.27 | Jul | $0.004 |
| Soybeans: | $8.00 | $0.03 | -$0.82 | Jul | $0.002 |
| SRW Wheat: | $4.90 | -$0.09 | -$0.17 | Jul | $0.031 |
| HRW Wheat: | $4.48 | -$0.19 | -$0.21 | Jul | -$0.012 |
| HRS Wheat: | $5.13 | -$0.06 | -$0.48 | Jul | -$0.029 |
Todd Hultmancan be reached at todd.hultman@dtn.com
Toddcan be followed throughout the day on Twitter@ToddHultman1
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