DTN Closing Grain Comments

Soybean Meal Survives Tariff News, Climbs Higher

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

General Comments:

Corn closed up 1 1/4 cents in the May contract and was up 1 1/4 cents in the December. Soybeans closed down 1 1/2 cents in the May and down 1/4 cent in the November. Wheat closed up 4 1/2 cents in the May Chicago, up 8 1/4 cents in the May Kansas City and up 9 3/4 cents in the May Minneapolis.

The June U.S. dollar index is down 0.40 at 89.07. April gold is up $19.80 at $1,347.20 while May silver is up $0.17 and May copper is down 0.0220. The Dow Jones Industrial Average is down 31 points at 23,927. May crude oil is up $1.27 at $65.57. May heating oil is up $0.0178, May RBOB gasoline is up $0.0164, and May natural gas is down $0.025.

For the week:

May corn closed down 5 1/2 cents and December was down 4 1/2 cents. May soybeans were down 21 1/4 cents while the November was down 14 1/2 cents. May Chicago wheat was down 7 1/2 cents, May Kansas City wheat was down 20 1/4 cents, and May Minneapolis wheat was down 9 cents.

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Corn:

May corn closed up 1 1/4 cents Friday but was down 5 1/2 cents on the week, finishing at $3.77 1/4 as grains largely overcame a bearish hit from China to start the day. Early Friday, China's Ministry of Commerce issued a list of 128 U.S. goods that it is proposing tariffs of at least 15% to balance the losses resulting from new U.S. tariffs on steel and aluminum. Soybeans are not yet on the list, but a 25% tariff on pork was listed as a secondary possibility after further evaluation by the Chinese government. Even though Friday's news was bearish for grains in general, corn was able to trade higher after the Buenos Aires Grain Exchange lowered its corn crop estimate late Thursday, from 34.0 million metric tons (mmt) to 32.0 mmt (1.26 billion bushels). The exchange also said 75% of the corn crop was rated either poor or very poor. Thirteen percent was harvested and 34% was considered mature. 2.225 bb of U.S. corn exports remain a questionable part of USDA's new estimates and early Friday, USDA said last week's export sales and shipments of corn totaled 57.9 million bushels (mb) and 54.1 mb respectively, a bearish combination overall that has total corn shipments down 26% in 2017-18 from a year ago. Technically, weekly momentum in corn remains bearish, and don't forget USDA Grain Stocks and Prospective Plantings reports are scheduled for Thursday, March 29, before markets close for the Good Friday holiday. DTN's National Corn Index closed at $3.39 Thursday, priced 37 cents below the May contract and near its lowest close in three weeks. In outside markets, the June U.S. dollar index is down 0.40 and the Dow Jones is down 37 points, still showing investor concerns about an escalating trade war.

Soybeans:

After May soybeans dropped to a 20-cent loss in the opening minutes after 8:30 a.m. CDT, traders gained their poise and brought prices back to a close of $10.28 1/4 Friday, a loss of just 1 1/2 cents. May soybeans were one of the hardest hit commodities by Friday morning's news from China with bullish noncommercial traders finding more reasons to liquidate. As with corn, if not for the growing trade dispute, soybeans might have seen much higher prices after the Buenos Aires Grain Exchange lowered its soybean crop estimate late Thursday, from 42.0 mmt to 39.5 mmt (1.45 bb). Eighty percent of Argentina's soybean crop was rated either poor or very poor and 18% was considered mature. Another bearish concern for soybeans has been the slow pace of export sales in the U.S. USDA said Friday that last week's export sales and shipments of soybeans totaled 27.9 mb and 20.2 mb respectively, a new marketing year low for soybean exports. So far in 2017-18, U.S. soybean shipments are down 12% from a year ago as Brazil's big harvest allows China to sidestep U.S. soybeans. Fundamentally speaking, there are plenty of bearish concerns for soybean prices in 2018 and USDA's March 29 reports have potential to be market movers. Technically, weekly momentum in soybeans and meal remains bearish, but meal's higher close in the face of Friday's bearish news is impressive. DTN's National Soybean Index closed at $9.51 Thursday, near its lowest in a month and priced 78 cents below the May contract.

Wheat:

May Chicago wheat closed up 4 1/2 cents and May Kansas City wheat was up 8 1/4 cents Friday, having escaped the earlier selling that hit grains related to news of China's new tariffs. As mentioned in Before the Bell comments, U.S. wheat has little to fear from Friday's news as China doesn't import any significant amount of wheat and noncommercial traders are not as heavily long in wheat as they are in corn and soybeans. Early Friday, USDA said last week's export sales and shipments of wheat totaled 9.7 mb and 17.4 mb respectively, another bearish combination that has total wheat shipments down 8% in 2017-18 from the previous year's slow pace. The main bullish factor for wheat prices at this time continues to be drought in the western half of the southwestern U.S. Plains and that continues with only light rain amounts expected the next seven days (see Friday's column by DTN Senior Analyst Darin Newsom, "Newsom's Wheat Crop"). A secondary concern is the condition of the SRW wheat crop in the eastern Midwest where heavy rains are expected to add to soggy field conditions. Technically, the trends remain down for both, Chicago and K.C. wheat. DTN's National SRW index closed at $4.23 Thursday, priced 33 cents below the May contract and near its lowest in a month. DTN's National HRW index closed at $4.29, near its lowest in a month.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman