DTN Closing Grain Comments

Friday's Grain Closes Erase Earlier Tariff Concerns

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

General Comments:

Corn closed down 1 cent in the May contract and was down 3/4 cent in the December. Soybeans closed up 2 1/2 cents in the May and down 3/4 cent in the November. Wheat closed up 7 1/2 cents in the May Chicago, up 8 1/4 cents in the May Kansas City, and up 17 1/2 cents in the May Minneapolis.

The June U.S. dollar index is down 0.40 at 89.75. June gold is up $6.60 at $1,335.10 while May silver is down 2 cents and May copper is down $0.0360. The Dow Jones Industrial Average is down 596 points at 23,910. May crude oil is down $1.54 at $62.00. May heating oil is down $0.0221 while May RBOB gasoline is down $0.0340 and May natural gas is up $0.028.

For the week:

May corn closed up 3/4 cent and December was up 1 cent. May soybeans were down 11 cents while the November was down 14 1/2 cents. May Chicago wheat was up 21 1/4 cents, May Kansas City wheat was up 39 1/2 cents, and May Minneapolis wheat was up 28 3/4 cents.

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Corn:

May corn closed down a penny at $3.88 1/2 Friday, surviving a day that could have turned out more bearish after President Trump proposed another $100 billion of tariffs against China. China doesn't buy much corn or wheat so those two grains have one advantage over soybeans, but we have all seen how grains in general can rise or fall together when traders react to emotional headlines. On a more practical note, the Corn Belt is not going to see much planting for a while as snow is flying across the central Midwest Friday with frigid temperatures pushing down from the northwestern Plains. Fundamentally, corn exports have been slow and Tuesday's WASDE report is likely to show a higher estimate of U.S. ending corn stocks after March 1 corn stocks totaled a record high 8.89 billion bushels (bb). Early Friday, USDA said 3.9 million bushels (mb) (100,000 metric tons) of U.S. corn were sold to Egypt for 2017-18, but actual corn shipments are down 25% from a year ago with five months remaining. Technically, the trend in May corn is sideways, weighed down by plenty of old-crop supplies in storage. The trend in December corn is up with prices near their highest level in seven months. DTN's National Corn Index closed at $3.55 Thursday, down from its highest prices since June 2016 and priced 35 cents below the May contract. In outside markets, the June U.S. dollar index is down 0.40 and the Dow Jones Industrial Average is down 596 points early Friday afternoon after more tariffs were proposed and the U.S. Labor Department said non-farm payrolls were up 103,000 in March, less than expected. U.S. unemployment held steady in March, at 4.1%.

Soybeans:

May soybeans were down 28 cents quickly on Thursday night's open after President Trump proposed another $100 billion of tariffs against China, but finished the day up 2 1/2 cents at $10.33 1/4, an 11-cent loss on the week. Considering China proposed a 25% tariff on U.S. soybeans Wednesday and President Trump raised the pot late Thursday with another response from China sure to follow, soybean prices were understandably volatile, but actually held up fairly well for the week. Soybeans' bearish concerns are far from over and will likely emerge again on Tuesday when USDA is apt to increase its estimate of U.S. ending soybean stocks in the April WASDE report. With U.S. soybean exports down 12% in 2017-18 from a year ago, and China preparing to enforce a new 25% tariff, it was odd that USDA reported 21.6 mb of soybeans sold early Friday with 14.4 mb for 2017-18 and the rest for 2018-19. Most sales were for unknown, but Mexico also had a stake. There was also a sale of 20,000 mt of U.S. soybean oil to unknown destinations. In spite of this week's volatile trading the trend in May soybeans stayed sideways and the trend in November soybeans stayed up. DTN's National Soybean Index closed at $9.58 Thursday, up from its lowest prices in over a month and priced 73 cents below the May contract.

Wheat:

May Chicago wheat closed up 7 1/2 cents and May Kansas City wheat closed up 8 1/4 cents, but it was May Minneapolis wheat that posted the largest gain, finishing 17 1/2 cents higher Friday, at $6.07 1/4. Just last Thursday, USDA told us it expects 12.6 million acres (ma) of spring wheat plantings and May Minneapolis wheat prices dropped 11 cents. This week, May Minneapolis wheat rebounded 28 3/4 cents higher with new concerns that all those acres may not get planted this year if this cold pattern in the northwestern Plains doesn't back off. Winter wheat prices also had their usual concerns Friday as the seven-day forecast remains mostly dry for the western Plains and helped July K.C. wheat take back 39 1/4 cents of its 52 3/4-cent loss in March. World wheat production has yet to be factored into 2018 prices, and so far, no significant problems are being reported. Technically, the weekly trends have turned up for all three wheats. DTN's National SRW index closed at $4.33 Thursday, up from its lowest price in over a month and 32 cents below the May contract. DTN's HRW index closed at $4.57, up from its lowest price in two months.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman