DTN Closing Grain Comments

Grains Tumble Lower on Better Crop Weather in July

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

General Comments:

September corn closed down 9 1/4 cents per bushel and December corn was down 9 cents. August soybeans closed down 14 3/4 cents and November soybeans were down 14 1/2 cents. September KC wheat closed down 17 1/2 cents, September Chicago wheat was down 15 1/2 cents and September Minneapolis wheat was down 9 3/4 cents. The September U.S. dollar index is trading up 0.724 at 96.390. The Dow Jones Industrial Average is up 25.68 points at 26,625.64. August gold is down $24.70 at $1,389.00, September silver is down $0.17 at $15.18 and September copper is down $0.0310 at $2.6825. August crude oil is up $0.08 at $58.55, August heating oil is down $0.0007, August RBOB is up $0.0180 and August natural gas is down $0.051.

Corn:

December corn closed down 9 cents at $4.22 1/2 Monday, still haunted by USDA's estimate from Friday of 91.7 million planted corn acres. Ask anyone knowledgeable about planting corn in 2019 and you're apt to get a "hell no" response to Friday's estimate, but noncommercials don't care, happily selling new-crop prices lower as they go 0 for 2 in early 2019. The problem for corn prices now is that we don't know any more about how many corn acres were planted than we did before Friday's report and the next planting survey from USDA won't be released until Aug. 12. On the demand side, corn exports have been suffering from June's higher prices and Monday's inspections report showed more of the same. USDA said 10.7 million bushels (mb) of corn were inspected for export last week, far below the 43.7 mb needed each week to reach USDA's export estimate. Fundamentally speaking, the outlook for corn prices remains neutral to bullish with a wide range of uncertainty adding volatility to prices. Technically, the trend in cash corn has turned sideways after hitting the highest prices in five years. DTN's National Corn Index closed at $4.06 Friday, 19 cents below the September contract. In outside markets, the September U.S. dollar index is up 0.72 and August gold is down $24.70 after the U.S. and China agreed over the weekend to not increase tariffs further.

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Soybeans:

November soybeans closed down 14 1/2 cents at $9.08 1/2 Monday, ignoring Friday's bullish estimate from USDA that only 80.0 million acres of soybeans were planted. Monday's lower trading in both corn and soybeans makes it look like traders believed USDA's corn planting estimate, but not the lower-than-expected estimate for soybeans. The reality is neither estimate is going to carry much weight among analysts, but the market can't ignore the short-term disappointment in corn. For soybeans, the fundamental case for higher prices has been slim all year and Friday's report wasn't transparent enough to inspire confidence in the 80.0 million acre estimate. Over the weekend, the U.S. and China agreed to start trade talks again, helped by U.S. promises to not to raise tariffs further and to ease the ban on dealing with the Chinese firm Huawei. President Donald Trump said in a Saturday Tweet China has agreed to purchase "large amounts of agricultural product from our great Farmers." Monday's inspections report from USDA showed total inspections running 25% below a year ago in 2018-19, a bearish ongoing concern for soybean prices. Technically, the trend is up in cash soybeans, but prices have been unable to trade above their one-year high at $8.41. DTN's National Soybean Index closed at $8.26 Friday, 79 cents below the August contract.

Wheat:

September KC wheat dropped 17 1/2 cents to $4.44 Monday, the lowest close in over a month as the winter wheat harvest makes progress. USDA's Crop Progress report is expected to show significant progress in the southwestern U.S. Plains where anecdotal reports of yields sound high and quality has been good. The 7-day forecast is mixed for wheat as lighter rain amounts will help harvest continue in the southwestern Plains while more rain in the forecast in the U.S. Northern Plains and eastern Midwest will disrupt harvest activity. For spring wheat, rain in the Northern Plains is favorable for crops and USDA's crop ratings for spring wheat are already high, likely to stay high on Monday afternoon. On the demand side, USDA said 22.4 mb of wheat were inspected for export last week, a bullish start for exports in a new season of bearish expectations. Outside of the U.S., Europe remained hot over the weekend, but will find relief from the high temperatures early this week. There simply are no significant concerns for world wheat production at this time and that is keeping prices under bearish pressure. Technically, the trend is sideways for cash SRW wheat and down for HRW and HRS wheats. DTN's National HRW Index closed at $4.33 Friday, 28 cents below the September contract. DTN's National SRW Index closed at $5.15, down from its highest prices in four years.

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

Follow him on Twitter @ToddHultman1

(CZ)

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Todd Hultman