DTN Before The Bell Grains

Morning CME Globex Update:

Dow Jones futures are showing 86 points lower early Friday, following new highs Wednesday. August crude oil is down 88 cents per barrel, the U.S. dollar index is up 0.4550 and August gold is down $18.40 an ounce.

Other Markets:

Dow Jones:	Lower
U.S. Dollar Index:	Higher
Gold:	Lower
Crude Oil:	Lower

Corn:

Corn may open a bit lower from Wednesday's sharp rally, which saw December corn nearly fill the open chart gap at $4.20 before rallying 15 1/4 cents. After a more than 50-cent per bushel drop from the recent highs, the trade is once again paying attention to poor conditions for over half of the Corn Belt, and the prospect for much lower acreage, with corn condition ratings overall at the worst reading in six years. The conditions in the Eastern Corn Belt are far worse on delayed planting and excess rains, and the basis has moved anywhere from 10 to 30 cents per bushel higher over the past few weeks as end users have scrambled to gain coverage. Although interior basis, especially in the east, has moved higher, at the ports U.S. corn continues to struggle as cheaper and more plentiful supplies from South America and Ukraine satisfy much of the new world demand. Weather on Friday features showers and thunderstorms moving across the Northern and Central Plains and Midwest. Funds are thought to be long over 100,000 contracts of corn again as we begin post-Independence Day trade. Look for the $4.48 to $4.50 range to provide strong resistance on a further rally. U.S. corn export sales for 2018-19 for the week ending June 27 were 6.9 million bushels (mb). Total commitments of 1.926 billion bushels (bb) are down 15% versus last year. Shipments of 11.5 mb were well below the 39.7 mb needed each week to achieve USDA's 2.2 bb projection. DTN's National Corn Index closed at $4.22 Wednesday, with an average basis of 15 cents under September.

Soybeans:

Soybeans finished sharply higher as well Wednesday in sympathy with corn, but may start off a bit weaker on Friday on a mostly benign weather outlook ahead. Rumors of China interest in U.S. beans at the PNW got into the market Wednesday, but demand for U.S. beans has been tepid, and shipments remain some 25% below year ago levels. African swine fever again raised its ugly head in China over the weekend with what would be the 143rd reported case since last August. For the first six months of the year, the incidence has slowed, with only 44 new cases. A vaccination for the deadly pig disease is still just in the early stages. Although many areas of the U.S. soybean crop are in poorer than normal condition, the recent warmth and sunshine should have helped, and the National Oceanic and Atmospheric Administration (NOAA) has come out with a 30-day forecast that is mostly cool and wet. Funds do remain net-short an estimated 70,000 contracts of soybeans still. Look for November beans to encounter resistance in the $9.15 to $9.20 range on a continuation of the rally. U.S. soybean sales for the week ending June 27 for 2018-19 were 31.9 mb and total commitments of 1.783 bb are down 15% versus a year ago. Shipments of 29.1 mb are under the 30.5 mb needed each week, and are down 24% from last year. DTN's National Soybean Index closed at $8.15, and reflects an average basis of 75 cents under August.

Wheat:

In spite of the acceleration of wheat harvest and impressive yield data thus far in the winter wheat harvest, all three wheat markets rallied Wednesday. U.S. wheat has recently priced itself out of world export markets, with both the Black Sea and EU taking over. On Thursday, Tunisia bought 67,000 metric tons (mt) of French wheat, and Algeria is said to have bought a larger than expected parcel of 636,000 mt of optional milling wheat and also likely to be French origin. France's Agri Mer reported wheat conditions for soft wheat there down sharply to 75% from 80% good to excellent, as the heat wave has sapped yield potential. The hard red winter (HRW) harvest should move mostly unimpeded, with a mostly clear weather outlook in the next week or so. HRW yields continue to suggest a crop that may be much larger than USDA's 794-mb estimate last month. Protein is running about 1% lower than a year ago following excess rains recently. On a further rally look for Kansas City September futures to see major resistance from $4.55 to $4.60. Wheat export sales of 10.2 mb for the week ending June 27. Total commitments of 265 mb for 2019-20 are up 21% versus a year ago. Shipments of 27 mb were well above the 17.4 mb needed to achieve USDA's 900 mb forecast. DTN's National HRW index closed at $4.22, and the average basis is at 22 cents under September.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow him on Twitter @Mantini_r

(CZ)

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