DTN Early Word Grains

Rain Comes To Kansas, Grains Tumble

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
Connect with Todd:
6:00 a.m. CME Globex:

May corn was 4 1/2 cents lower, May soybeans were 13 cents lower, and July Kansas City (HRW) wheat was 16 3/4 cents lower.

CME Globex Recap:

Early Monday, nearly everything is starting lower: stocks, bonds, most commodities, and even the U.S. dollar index. Grains especially are off to a lower start with a mix of rain and snow falling in Kansas along with signs of excessive speculator bullishness.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 72.85 points (0.3%) higher at 24,946.51, the NASDAQ Composite was 0.25 points (0.0%) higher at 7,481.99, and the S&P 500 gained 4.68 points (0.2%) to 2,752.01 Friday. DJIA futures were 123 points lower early Monday morning. Asian markets were mixed with Japan's Nikkei 225 down 195.61 points (-0.9%), Hong Kong's Hang Seng up 11.79 points (0.1%), and China's Shanghai Composite up 9.37 points (.3%). European markets were trading mostly lower with London's FTSE 100 down 75.86 points (-1.1%), Germany's DAX down 126.26 points (-1.0%), and France's CAC 40 down 40.47 points (-0.8%). The euro was 0.0004 lower at 1.2281 while the U.S. dollar index was up 0.02 at 90.23. March 30-year T-Bonds were 7/32 lower at 145'07 while April gold was down $1.50 at $1,310.80. Crude oil was $0.26 lower at $62.08 as Brent crude was down $0.30 at $65.91. China's Dalian soybeans were steady to higher and May Malaysian palm oil futures were up 0.3% overnight.

BULL BEAR
1) No doubt, some are still hoping USDA's 2.225 billion bushel corn export estimate can still be achieved. 1) There is plenty of U.S. old-crop corn in storage and soil moisture is favorable across most of the Corn Belt.
2) In spite of some rain over the weekend, Argentina's forecast remains mostly dry. 2) Noncommercial positions in corn and soybeans are extremely bullish, vulnerable to disappointment.
3) Drought remains a serious concern in Oklahoma and Texas. 3) A mix of rain and snow are falling over Kansas Monday morning.

The weekly Newsom on the Market column can be found on subscription sites only. On DTN Pro it is in News/Town Hall and on MyDTN in News/Columns.

MORE COMMODITY-SPECIFIC COMMENTS

CORN May corn is down 4 1/2 cents early with bearish influence coming from K.C. wheat as a mix of rain and snow fall over Kansas. Snow is also falling in the northwestern U.S. Plains and joins part of the precipitation expected this week in the central and eastern Midwest. May corn has dropped roughly 17 cents since last Tuesday, putting bullish speculators in a bind. Friday's CFTC data showed noncommercials extremely bullish in corn as of Mar. 13, holding 415,450 contracts, their largest net long position since June 2011. With prices now falling, those positions are now under pressure to liquidate and it probably did not help that eastern Argentina had scattered showers over the weekend. The short-term trend in corn has turned down and the weekly stochastic shows a bearish change in momentum.

SOYBEANS May soybeans are down 13 cents and May meal is down $5.50, both pressured by commercial selling after eastern Argentina received some rain over the weekend. The rain is not likely to change the outlook for Argentina's crops much, but like corn, comes at a time when bullish enthusiasm runs high. Friday CFTC data showed noncommercials increased net longs in soybeans from 194,877 to 201,382 as of Mar. 13, the largest net long position since July 2016. At the same time, Brazil's soybean harvest continues to make progress and Dow Jones reported Friday that private consultant AgRural estimated Brazil's soybean harvest at 58% complete, close to its usual pace. Also like corn, the weekly stochastic for spot soybeans is turning lower and fundamentally speaking, soybeans have plenty of bearish risk ahead, including USDA's Prospective Plantings report on Mar. 29.

WHEATJuly K.C. wheat is down 16 3/4 cents early, pressured by commercial selling as a mix of snow and rain are falling over Kansas, bringing some benefit to winter wheat areas where crops still have a chance. Oklahoma and Texas still remain dry with another chance for light showers at the end of the seven-day forecast. Friday's CFTC data showed noncommercials neutral toward Chicago wheat, holding just 1,628 net longs as of Mar. 13. Commercials turned net long 4,356 contracts. In K.C. wheat, noncommercials increased net longs from 43,796 to 49,548 as of Mar. 13, just before K.C. wheat prices fell over 40 cents the past three sessions. As with corn and soybeans, the bearish change in momentum has caught traders in a bull trap and they are now under pressure to liquidate. Fundamentally, the U.S. winter wheat crop is still likely to be lower this year, but it is possible that the bullish peak is behind us.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.45 -$0.04 -$0.38 May $0.002
Soybeans: $9.71 $0.10 -$0.78 May $0.009
SRW Wheat: $4.35 -$0.10 -$0.33 May $0.008
HRW Wheat: $4.57 -$0.14 -$0.43 May $0.002
HRS Wheat: $5.92 -$0.04 -$0.20 May -$0.002

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

Toddcan be followed throughout the day on Twitter @ToddHultman1

(KR)

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Todd Hultman