DTN Before The Bell Grain Comments

Grains Keep Bullish Tone Early Monday

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

May contracts of corn, soybeans, and winter wheat were all higher early Monday, still finding benefit from Thursday's bullish planting estimates from USDA. Even Minneapolis wheat was slightly higher, even though spring wheat acres came in higher than expected, at 12.6 million.

Other Markets:

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

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Corn:

May corn was up 3 cents early Monday, showing follow-through buying after USDA estimated a lower-than-expected corn planting of 88.0 million acres on Thursday. USDA's bullish report also surprised speculators that had been retreating from their large bullish positions. Friday's CFTC data showed noncommercials still bullish in corn with 301,735 net longs as of Mar. 27, but that was down 113,715 contracts from where they were two weeks earlier, two days before USDA estimated a smaller planting. The cold, wet conditions that are preventing early planting this year continue this week with moderate precipitation expected in the northern and eastern Corn Belt, some of which will be snow. Heavier amounts continue to fall over the Delta and Ohio River Valley, adding to flooding concerns. Warmer temperatures for the Corn Belt are still over a week away which adds to concerns that some corn acres may shift to soybeans, but it is still early in the new season. Fundamentally, the outlook for corn is neutral while the trend in May corn has returned to up. DTN's National Corn Index closed at $3.51 Thursday, back near its highest prices since June 2016 and priced 37 cents below the May contract. In outside markets, the June U.S. dollar index is down 0.27 after China enacted the second group of tariffs proposed earlier, which include pork.

Soybeans:

May soybeans were up 9 cents early, adding to Thursday's 26 3/4 cent gain as traders continue to show relief that USDA's soybean planting estimate was not higher than last year's record, as many suspected it would be. 89.0 million acres is still bearish enough to produce a 4.6 billion bushel crop if weather cooperates and there is always a chance that actual soybean acres will be higher than 89.0 million, if this early pattern of cold and wet spring weather continues to hinder corn planting. Friday's CFTC data showed noncommercials staying bullish in soybeans, holding 192,800 net longs as of Mar. 27, which is still near the most since July 2016. In South America, Argentina's soybean crop is facing another week of mostly dry weather while Brazil's soybean harvest still has a chance to achieve a new record high. Technically, the trend has turned up again for May soybeans and has remained up for November soybeans, even while bearish fundamental concerns persist. DTN's National Soybean Index closed at $9.67 Thursday, near its highest prices in a year and priced 78 cents below the May contract.

Wheat:

May Chicago wheat was up 4 3/4 cents and May K.C. wheat was up 7 1/4 cents early Monday, facing a familiar seven-day forecast of more dry weather in the southwestern U.S. Plains while the soggy SRW wheat crop in the eastern Midwest gets even more rain. While these are not favorable conditions for this year's U.S. winter wheat crop, we are finding no signs of concern that U.S. wheat supplies are in danger as futures spreads show excess carry in back months and exports are languishing, unable to compete with abundant global supplies. Friday's CFTC data showed noncommercials turning more bearish in Chicago wheat with 15,216 net shorts as of Mar. 27. Commercials on the other hand, increased net longs to 26,227. Long-term, both Chicago and K.C. wheat prices are showing gradual improvement, but are still historically cheap and are finding it difficult to sustain an uptrend while world supplies are plentiful. DTN's National SRW index closed at $4.21 Thursday, up from its lowest close in over a month and 30 cents below the May contract.

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

Follow Todd on Twitter @ToddHultman1

(KR)

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Todd Hultman