DTN Early Word Grains
Grains Start Lower as Rains Push Eastward
July corn is down 3 cents, July soybeans are down 5 1/4 cents and July KC wheat is down 5 cents.
CME Globex Recap:U.S. stock futures and European stock markets are higher early Friday, ahead of Friday morning's report on non-farm payrolls for May. Outside commodities are mostly higher after Saudi Arabia's energy minister indicated willingness to continue the oil production cuts agreed to in December. Chinese markets were closed Friday and will open again on Monday.
OUTSIDE MARKETS:Previous closes on Thursday showed the Dow Jones Industrial Average up 181.09 at 25,720.66 and the S&P 500 up 17.34 at 2,843.49, while the 10-yr Treasury yield stayed at 2.12%. Early Friday, DJIA futures are up 79 points. Asian markets are mixed with Japan's Nikkei 225 up 110.67 (0.5%) and China's Shanghai Composite closed on Friday. European markets are higher with London's FTSE 100 up 50.44 points (0.7%), Germany's DAX up 78.79 points (0.7%), and France's CAC 40 up 67.33 points (1.3%). The June euro is down $.0006 at $1.1275. The June U.S. dollar index is up 0.07 at 97.02. The September 30-year T-bond is up 4/32nds, while August gold is down $4.10 at $1,338.60 and July crude oil is up $0.71 at $53.30. China's Dalian Exchange was closed for a holiday and will be open Monday.
| BULL | BEAR | ||
| 1) | Heavy rains in Oklahoma and parts of southern Kansas Thursday caused flooding and are hitting winter wheat areas at a vulnerable time before harvest. | 1) | China's 25% tariff remains on U.S. soybeans and President Donald Trump is threatening another $300 billion of tariffs on Chinese goods. |
| 2) | The back half of the 14-day outlook expects below normal temperatures and above normal precipitation for most of the Midwest, adding to the challenges of late planting. | 2) | So far, Mexico has not threatened retaliation, but new U.S. tariffs on Mexican goods are set to take effect June 10, possibly prompting a response that could be negative to U.S. ag interests. |
| 3) | Talks with Mexico are expected to continue Friday. | 3) | Even after a rally in late May, July and November soybean prices remain below their 100-day averages and slow exports suggest a higher estimate of U.S. ending soybean stocks lie ahead. |
CORN July corn is down 3 cents early Friday, while rain on the weather map is confined mainly to the southeastern U.S. The seven-day forecast has a drier outlook west of the Mississippi River, which will be favorable for late planting efforts. East of the river however, the outlook remains wet with moderate amounts expected around the Great Lake states and heavier amounts south of the Ohio River. The extended forecast expects above normal precipitation for most of the Midwest and still supports expectations that a significant amount of corn acres will be lost in 2019. Just how big a reduction is the difficult question of the moment and USDA's acreage estimate on June 28 will be partially helpful, but will also be too early to have complete data available. In spite of this week's pullback, corn prices have fundamental support and the trend remains up.
SOYBEANS July soybeans are down 5 1/4 cents early Friday, falling back from last week's one-month high with little to hold prices up after the rally in late May. Planting is also a concern for soybeans, but they have more time than corn to adapt to this year's difficult conditions and the latest seven-day forecast is offering a better chance for planting in the central and western Midwest. The eastern Midwest and eastern Canada continue to be difficult environments to farm and it seems certain that acres will be lost in 2019. Thursday's export sales report offered no encouragement for keeping U.S. ending soybean stocks below 1 billion bushels in 2018-19. On the trade front, U.S. Treasury Secretary Steven Mnuchin is expected to meet with Chinese officials, but there is no reason to believe the gap of trade differences is any narrower. The outlook for soybean prices remains bearish.
WHEAT July KC wheat is down a nickel early, falling back below the 100-day average at $4.58 as Thursday's heavy rains push off to the east. Oklahoma and part of southern Kansas saw significant flooding from Thursday's rains, bad timing for winter wheat crops nearing harvest and likely to add to quality concerns. Overall, USDA continues to give the winter wheat crop a high rating and this year's best conditions are seen across the northwestern U.S. USDA's next production estimates for winter wheat will be released in Tuesday's WASDE report and will likely show a slightly smaller estimate than the 1.268 billion bushels posted in May. July Minneapolis wheat is unchanged early Friday with more rain needed in the western Canadian Prairies and some concern of dryness in Russia's spring wheat region.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.95 | $0.06 | -$0.26 | Jul | $0.007 |
| Soybeans: | $7.88 | $0.00 | -$0.81 | Jul | $0.009 |
| SRW Wheat: | $4.93 | $0.20 | -$0.17 | Jul | $0.011 |
| HRW Wheat: | $4.34 | $0.10 | -$0.21 | Jul | $0.002 |
| HRS Wheat: | $5.17 | $0.17 | -$0.48 | Jul | -$0.008 |
Todd Hultman can be reached at todd.hultman@dtn.com
Toddcan be followed throughout the day on Twitter @ToddHultman1
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