DTN Closing Grain Comments

Grains Take a Tumble Wednesday

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

General Comments:

July corn closed down 8 3/4 cents per bushel and December corn was down 9 3/4 cents. July soybeans closed down 10 1/4 cents and November soybeans were down 11 1/2 cents. July KC wheat closed down 7 3/4 cents, July Chicago wheat was down 9 1/4 cents and July Minneapolis wheat was down 10 3/4 cents.

The September U.S. dollar index is trading down 0.428 at 96.725. The Dow Jones Industrial Average is up 57.95 points at 26,523.49. August gold is up $2.10 at $1,352.80, July silver is up $0.02 at $15.01 and July copper is down $0.0220 at $2.6810. July crude oil is down $0.28 at $53.62, July heating oil is up $0.0020, July RBOB is up $0.0124 and July natural gas is down $0.033.

Corn:

July corn fell back 8 3/4 cents to $4.41 Wednesday on light trading volume, showing hesitation at $4.60 while the market plays guessing games with possible acre and yield combinations in 2019. USDA's June 28 Acreage report will not have the final say on plantings this year as efforts were still being made when the information was being gathered in early June. Even so, the report will be the most credible planting estimate to date and will help narrow the range of guesses, especially after Monday's planting progress percentages were found to also include prevented acres. For anyone still trying to plant row crops, the seven-day forecast remains unhelpful with heavy rain amounts expected over much of the central U.S. and flash flood watches posted in much of the Eastern Corn Belt. On the demand side, the U.S. Energy Department said 1.081 million barrels of ethanol per day were produced last week, down slightly from the previous week, but still at a high level. U.S. ethanol inventory dropped 200,000 barrels to 21.6 million barrels. The fundamental outlook for corn prices remains neutral to bullish in 2019 with plantings and yield highly uncertain. Technically, the trend of cash corn prices remains up with prices down from their highest level in five years. DTN's National Corn Index closed at $4.29 Tuesday, 21 cents below the July contract. In outside markets, the September U.S. dollar index is down 0.43 after the Federal Reserve kept the federal funds target unchanged at 2.25% to 2.50%, as expected. Changes in this month's Fed statement suggested a rate cut is becoming more likely.

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Soybeans:

July soybeans closed down 10 1/4 cents at $9.03 1/4 Wednesday, still holding above their 100-day average after Monday's 16-cent gain responded to a wet forecast. Wednesday's seven-day forecast looks no better as far as planting hopes go with heavy rain amounts over much of the central U.S. and flash flood watches in the eastern Midwest. USDA said Monday 77% of soybeans were planted, but as explained for corn above, the denominator in the percentage is a moving target, so no one knows 77% of what USDA means. As with corn, the next decent estimate of soybean plantings will be in the Acreage report on June 28. Until then, the only thing supporting these higher prices is hope that the 2019 crop will be significantly lower, but that is not a strong argument for soybeans at the moment. There is talk that the presidents of the U.S. and China will talk trade at the G20 meeting in Osaka, Japan at the end of this month, but no sign yet that either side is willing to change their position. Fundamentally, the outlook for soybean prices remains bearish with over 1 billion bushels of U.S. ending soybean stocks likely in 2018-19 and little change expected in 2019-20. Technically, the trend is up in cash soybeans, but prices are still below their one-year high at $8.41. DTN's National Soybean Index closed at $8.37 Tuesday, near its highest price in a year and 77 cents below the July contract.

Wheat:

July KC wheat closed down 7 3/4 cent at $4.57 1/2, lacking much argument, which shows buyers are becoming increasingly difficult to find. The rally that started in mid-May was good for $1.15 of appreciation and was based mostly on weather concerns as harvest approaches. The seven-day forecast is still wet for the eastern half of the southwestern U.S. Plains and all of the eastern Midwest where SRW wheat grows. However, Wednesday's selling makes it look like those bullish concerns have run their course. The same can also be said for July Minneapolis wheat, which closed down 10 3/4 cents at $5.41 1/2. Late last week, the July contract came within a few cents of its three-month high, but that was all prices could muster without help from any significant threat to world wheat crops. Fundamentally speaking, it will be difficult for U.S. wheat prices to exceed their highs in June while most of the world's wheat crops are doing well. Technically, the trend is currently up for cash SRW wheat and sideways for HRW and HRS wheats. DTN's National HRW index closed at $4.47 Tuesday, down from its recent three-month high and 18 cents below the July contract. DTN's National SRW index closed at $5.17, down from its highest price in ten months.

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

Follow him on Twitter @ToddHultman1

(CZ)

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Todd Hultman