DTN Closing Grain Comments

General Comments:

September corn closed down 1 1/2 cents and December corn closed down 3/4 cent. August soybeans closed up 5 1/4 cents and November soybeans were up 4 1/2 cents. September Kansas City wheat closed up 8 cents, September Chicago wheat was up 10 1/2 cents and September Minneapolis wheat was up 1 3/4 cents.

The September U.S. dollar index is unchanged at 97.42. The Dow Jones Industrial Average is down 116.18 points at 27,233.01. December gold is up $1.00 at $1,435.50, September silver is up $0.15 at $16.63 and September copper is up $0.0090. September crude oil is down $1.00 at $55.77, September heating oil is down $0.0182, September RBOB gasoline is down $0.0155 and September natural gas is down $0.078.

Corn:

December corn ended down 3/4 cent at $4.30 3/4 Wednesday with mild summer temperatures and mostly dry weather spread across the central U.S. The seven-day forecast is also mostly dry, except for moderate rain amounts around the Great Lakes. Had corn enjoyed a better planting season, the favorable outlook for pollination might have us anticipating record yields, but that is not the case this year. USDA's good-to-excellent rating of 57% is the lowest in seven years as many areas are suffering from this year's excessively wet and late start. It is also worth noting that western Europe is going through a brief heat wave again this week, just as corn is pollinating in France. On the demand side, the U.S. Energy Department said Wednesday that ethanol production dropped from 1.066 million barrels per day (bpd) to 1.039 million bpd last week, still a relatively high pace. There are legitimate concerns about high corn prices pinching both, ethanol margins and export activity. In spite of the lower production, U.S ethanol inventory increased 300,000 barrels to 23.7 million barrels on July 19, a sign of slower demand. For now, the corn market continues to chop sideways, biding time until the Aug. 12 WASDE report provides what should be a more accurate planting estimate. DTN's National Corn Index closed at $4.18 Tuesday, 8 cents below the September contract and down from its five-year high. In outside markets, the September U.S. dollar index is unchanged and most other commodities are mixed.

Soybeans:

November soybeans closed up 4 1/2 cents at $9.08 1/4 Wednesday, crossing back above the 100-day average for the fifth time in two months. In other words, soybean prices continue to chop sideways in the low $9s as a smaller U.S. soybean crop in 2019 continues to develop. Pods are starting to set in southern states, but it will be weeks before pods show up in the central and northern Midwest. This week's milder temperatures and mostly dry forecast is largely favorable for soybean crops, but parts of Iowa and Illinois could use more rain. U.S. soybean demand remains restricted by China's 25% tariff and Associated Press news reported that U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer will travel to Shanghai early next week to meet with Chinese leaders. No one is saying an agreement is close and Wednesday's cancelled sale didn't inspire any confidence. Early Wednesday, USDA said a prior sale of 3.7 million bushels (100,000 mt) of soybeans to unknown was cancelled for 2018-19. The fundamental outlook for U.S. soybean prices remains bearish until China becomes a willing buyer again. This year's smaller crop helps moderate the bearish outlook, but U.S. ending stocks are expected to stay at high levels. Technically, the trend in cash soybeans is sideways. DTN's National Soybean Index closed at $8.17 Tuesday, down from a new one-year high and 69 cents below the August contract.

Wheat:

September KC wheat closed up 8 cents at $4.39 1/2, possibly helped by this week's heat wave in western Europe, but I have to note that French milling wheat prices were only up 0.75% on the day, not exactly a buying panic. As mentioned in Tuesday's Closing Market Video, even though the outlook for wheat prices remains fundamentally bullish, from a technical perspective, prices appear to be finding support near their lowest levels in two months. I suspect the possibility of a bullish WASDE report for corn on Aug. 12 may be making potential short sellers in wheat more cautious than usual. The winter wheat harvest should be making good progress with this week's drier forecast, although there are red flag warnings in Montana. Day 1 of the Wheat Quality Council's Spring Wheat Tour estimated a yield of 43.1 bushels per acre (bpa), up from 38.9 bpa a year ago (see "Spring Wheat Tour: Day 1" by DTN Contributor Charles Wallace in Wednesday's DTN). The heat wave in western Europe is interesting, but the mostly favorable outlook for world wheat production in 2019 remains bearish for wheat prices. Technically, the trend is currently sideways for SRW and HRS wheat with prices near support. For HRW wheat, the trend is down, but suspect in light trade. DTN's National HRW index closed at $4.09 Tuesday, 23 cents below the September contract. DTN's National SRW index closed at $4.68, 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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