DTN Closing Grain Comments

General Comments:

September corn closed up 3/4 cent per bushel and December corn was down 1/4 cent. August soybeans closed down 5 1/4 cents and November soybeans were down 5 1/2 cents. September Kansas City wheat closed down 4 1/2 cents, September Chicago wheat was down 2 cents and September Minneapolis wheat was down 2 1/2 cents.

The September U.S. dollar index is trading down 0.236 at 96.805. The Dow Jones Industrial Average is down 51.40 points at 27,284.23. August gold is up $15.40 at $1,426.60, September silver is up $0.34 at $16.02 and September copper is up $0.0130 at $2.7130. August crude oil is down $0.64 at $56.98, August heating oil is down $0.0058, August RBOB is down $0.0115 and August natural gas is down $0.002.

Corn:

December corn ended up a quarter cent at $4.41 1/2 Wednesday, not showing much response to heat concerns for crops in the latest forecast. As noted the past two days, mostly dry weather and milder summer temperatures are expected in the extended forecast, but from Wednesday through Saturday, extreme heat is going to be felt in the central and southern U.S. Plains, stressful to crops, livestock and the rest of us. By contrast, moderate-to-heavy rains are in the five-day forecast for Minnesota, Wisconsin and much of Iowa. On the demand side, export activity for corn has slowed, but the pace of ethanol production remains supportive for corn prices. The U.S. Energy Department said last week's ethanol production increased from 1.047 to 1.066 million barrels per day, an active pace. Ethanol inventories increased from 23.0 to 23.4 million barrels, one million barrels below their spring peak. The fundamental situation for corn remains baffled by the lack of a credible planting estimate, and it is fair to say that corn yields will be lower in 2019, but it is difficult to guess how much lower. The most likely price outlook is neutral for corn while cash prices are near their highest level in five years, but a more bullish scenario is still possible. Technically, the trend in cash corn is up and choppy with plenty of unknowns still confronting traders. DTN's National Corn Index closed at $4.27 Tuesday, 8 cents below the September contract and a new five-year high. In outside markets, the September U.S. dollar index is trading down 0.24, taking back part of Tuesday's gain, while most other commodities are lower, except for metals, hogs, coffee and oats.

Soybeans:

November soybeans fell 5 1/2 cents to $9.00 1/2 Wednesday, a quiet day of light-volume trade that saw prices ignore heat concerns and sag in a relatively narrow trading range. As mentioned above for corn, soybean crops in the central and southern Midwest are also facing four days of extreme heat and mostly dry weather, which will be tough on this year's late-planted crops. Temperatures in the high 90s or even 100s are expected to reach as far north as Iowa, Illinois and Nebraska -- major producing areas for both corn and soybeans. Milder temperatures are expected to follow early next week, but much of the forecast will still be on the dry side. In southern Minnesota, not much has changed from spring as conditions remain too wet and more rain is in the five-day forecast. While a smaller U.S. soybean crop looks likely in 2019, trade with China remains the larger issue. So far, it is difficult to find any evidence of the U.S. and China coming together on a trade deal. Granted, events could change quickly, but until they do, the fundamental outlook for soybeans remains bearish. Technically speaking, the trend is sideways in cash soybeans with support around $7.85. DTN's National Soybean Index closed at $8.18 Tuesday, down from a new one-year high and 69 cents below the August contract.

Wheat:

September KC wheat sagged quietly lower Wednesday, closing down 4 1/2 cents at $4.41 3/4, while September Chicago wheat was down 2 cents. The next four days of hot and mostly dry weather is tough on harvesters, but not a significant problem for the winter wheat harvest itself. The seven-day forecast is mostly dry for spring wheat in the northwestern U.S. Plains, but temperatures will be on the cool-to-mild side, favorable for wheat crops. September milling wheat in France posted a slight gain Wednesday, but it remains difficult to find any new or serious production threats outside of North America in 2019. News from Dow Jones that Egypt bought 60,000 metric tons of wheat from Russia gave us another reminder of who the world's largest exporter is. With world wheat production on track for a new record high in 2019, wheat's best hope for higher prices this year is a bullish surprise in corn. Until then, the price outlook for wheat remains bearish. Technically, the trend is currently sideways for all three cash wheats. DTN's National HRW index closed at $4.25 Tuesday, 22 cents below the September contract. DTN's National SRW index closed at $4.88, 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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