DTN Closing Grain Comments

Crops Tumble Lower Amid Tariffs, Some Planting

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

General Comments:

July corn closed down 10 1/2 cents per bushel and December corn was down 10 1/2 cents. July soybeans closed down 12 cents and November soybeans were down 12 cents. July Kansas City wheat closed down 22 3/4 cents, July Chicago wheat was down 16 1/2 cents and July Minneapolis wheat was down 14 1/4 cents.

The June U.S. dollar index is trading up 0.201 at 97.200. The Dow Jones Industrial Average is up 164.19 points at 25,496.37. August gold is up $5.10 at $1,333.80, July silver is up $0.01 at $14.78 and July copper is down $0.0455 at $2.6235. July crude oil is down $1.53 at $51.95, July heating oil is down $0.0412, July RBOB is down $0.0312 and July natural gas is down $0.023.

Corn:

July corn fell 10 1/2 cents to $4.14 3/4 Wednesday, pressured by ongoing talk of increased tariffs on Mexico and what retaliation, if any, the tariffs may bring. Also, Wednesday's weather map is giving some better planting opportunities, mainly in the northwestern Corn Belt where the forecast is for light-to-moderate amounts the next seven days. The eastern Midwest continues to look wet in the seven-day forecast and is getting more rain Wednesday. The heaviest amounts for the week ahead are targeted for the southeastern U.S., including Missouri and Arkansas. Trying to figure out the size of the 2019 crop remains a tough challenge for estimating new-crop corn prices, while demand has become a secondary concern. On the demand side, U.S. corn exports have been falling short of expectations lately, and the FOB corn price in New Orleans is currently 45 cents above the FOB price in Brazil. The U.S. Department of Energy said last week's ethanol production slipped from 1.057 million barrels to 1.044 million barrels per day, still an active pace. So far, corn prices are maintaining a neutral-to-bullish outlook, with a wide range of uncertainty surrounding this year's crop. Technically, the trend of cash corn prices remains up and appears to be finding some resistance. DTN's National Corn Index closed at $3.99 Tuesday, 27 cents below the July contract and near its highest price in four years. In outside markets, Dow Jones Industrials are up 164 points and August gold is up $5.10, both benefitting from increased expectations for the Federal Reserve to lower interest rates in 2019. Wednesday's Beige Book from the Fed mentioned "some Districts noted signs of slowing activity..."

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Soybeans:

July soybeans closed down 12 cents at $8.69 3/4 Wednesday, falling back from the 100-day average at $9.00 as traders find it difficult to bid this market much higher. Soybean planting remains a concern and as with corn above, farmers are getting some better planting chances in the northwestern Midwest, while the eastern and southern Midwest keep attracting rain. Aside from planting concerns, it is difficult to get past the bearishness of U.S. ending stocks in 2018-19 that will likely come in above 1 billion bushels; at the same time, no meaningful trade talks are being held with China and the U.S. is threatening new tariffs against Mexico. USDA will have a new update of weekly export sales early Thursday, but hopes are not high as there have been no daily export sales announcements in over a week. Technically, the trend in cash soybeans has changed back to sideways, reflecting uncertain planting conditions and cash prices appear to have found resistance near $8.07. DTN's National Soybean Index closed at $8.00 Tuesday, 82 cents below the July contract and up nearly a dollar from its lowest price in 12 years.

Wheat:

July KC wheat dropped a second day, finishing down 22 3/4 cents at $4.45 3/4 Wednesday, a quick reversal back from Monday's new three-month high. The seven-day forecast expects moderate rain amounts in Oklahoma and heavier amounts to the east, neither of which are not seen as welcome this late in the season. In the case of Oklahoma, wheat harvest is getting ready to begin. The excess moisture is a threat to wheat quality and may not be assessed until wheat arrives at the elevators. In the northwestern U.S., the seven-day forecast is favorable with light-to-moderate showers expected. In the eastern Midwest, conditions remain too wet for good crop ratings. Outside of the U.S., the western Canadian Prairies are expecting helpful rains this weekend. East Ukraine and south Russia will be hot and dry the next 10 days, but world crop conditions remain generally favorable. Technically, the trend is currently up for all three U.S. wheats, but Tuesday's peak of $4.97 in July KC wheat is a sign of formidable resistance. DTN's National HRW index closed at $4.48 Tuesday, down from its recent three-month high and 17 cents below the July contract. DTN's National SRW index closed at $4.90, also down from its highest price in three months.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman