DTN Before The Bell Grain Comments

Grains a Little Higher; China Rules on Sorghum

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

Morning CME Globex Update:

May and July contracts of corn, soybeans, and all three wheats were starting a little higher Tuesday, finding a buying reflex after Monday's losses. China initiated punitive steps against importers of U.S. sorghum -- a reminder that trade issues have not been settled.

Other Markets:

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

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Corn:

May corn was up a half-cent early Tuesday, an early attempt at bargain-hunting with prices at their lowest level in over a week. Tuesday's weather map has snow falling from Michigan and Ohio to the east, but is mostly clear over the rest of the Corn Belt with another chance of snow in northern Iowa coming on Wednesday. Tuesday's temperatures will stay below 50 in most of the northern Corn Belt while active winds bring temperatures in the mid-90s to western Texas, again raising the risk of wildfires. Late Monday, USDA said 3% of corn was planted and Texas is still the leading state for progress while most of the Corn Belt is still too cold. Fundamentally, the risk that corn won't get planted is still small and the outlook for 2018-19 is neutral. Technically, the trend in May corn remains sideways and the trend in new-crop corn is up. Related to corn, AP news said China ruled on Tuesday that sorghum prices imported from the U.S. were unfairly low and ordered importers to deposit 179% of the value of their goods to cover the cost of possible duties. DTN's National Corn Index closed at $3.49 Monday, down from its highest prices since June 2016 and priced 34 cents below the May contract. In outside markets, the June U.S. dollar index is up 0.12 and other commodities are mostly lower after the U.S. Commerce Department said housing starts were up 1.9% in March, more than expected.

Soybeans:

May soybeans were up 2 cents early Tuesday, aided by light commercial buying and slightly higher prices of both, soybean meal and bean oil. Even though corn planting is off to a slow start in 2018, it is too early to give up on corn yet and soybean prices may be showing a little encouragement from chances for warmer temperatures and somewhat drier conditions in the extended forecast. Soil moisture is generally favorable across the Midwest, meaning warmer temperatures are all that are needed to get planters going in the fields. In the bigger picture, soybeans remain a divided market with bullish conditions supporting higher prices outside the U.S. while sluggish demand creates a more neutral price outlook within the U.S. Monday's 171.9 million bushel soybean crush estimate from NOPA was a bullish sign of domestic demand even though prices fell after the report. For now, the trend in new-crop soybeans remains up with signs of strong commercial buying interest in future spreads. DTN's National Soybean Index closed at $9.71 Monday, down from its highest prices in over a year and priced 71 cents below the May contract.

Wheat:

July Chicago wheat was up 3 cents and July K.C. wheat was up 4 1/2 cents, trying to take back some of Monday's loss related to rain in the forecast for the southwestern U.S. Plains later this week. Broad coverage of moderate amounts are still expected and will be welcome for reducing the risk of wildfires, if nothing else. Tuesday afternoon could be a problem in that regard with windy conditions in West Texas and temperatures in the mid-90s. Late Monday, USDA increased the good-to-excellent rating for winter wheat from 30% to 31%, but also increased the poor-to-very poor rating from 35% to 37%, leaving less in the middle. Sep Minneapolis wheat is up a nickel early with cold temperatures hanging around the northern Plains this week after the weekend's winter storm. USDA said 3% of spring wheat was planted, mostly in Washington and Idaho while the northwestern Plains remain under snow. For now, the trends remain sideways for all three wheats with winter wheat prices falling back toward the lower end of their trading range. DTN's National SRW index closed at $4.31 Monday, down from its highest prices in eight months and 31 cents below the May contract.

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

FollowTodd on Twitter @ToddHultman1

(KR)

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Todd Hultman