DTN Before The Bell Grain Comments

Red Morning, Grains Take Warning

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

Morning CME Globex Update:

There aren't many sailors in the Corn Belt, but grain traders seem to be taking warning early Friday with the June U.S. dollar index a little higher and nearly all grain-related contracts lower. A trend of gradually warmer temperatures is giving hope that corn planting may soon be able to pick up the pace.

Other Markets:

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

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Corn:

July corn was down 2 cents early Friday, starting lower on the day along with most other grain-related contracts as weather around the Corn Belt is starting to feel more like spring. Friday's weather map is starting mostly clear with Midwestern temperatures expected in the 50s and 60s, even reaching a little warmer by Monday. When planting does take place, corn should get off to a good start as most areas are starting with favorable soil moisture. In central Brazil, the second corn crop is doing well with light to moderate showers in the five-day forecast. Fundamentally, the outlook for corn prices remains neutral with all the uncertainty of a new growing season ahead. Technically, the trend remains sideways in May corn and up in new-crop corn although prices have backed down from their April high. DTN's National Corn Index closed at $3.50 Thursday, down from its highest prices since June 2016 and priced 32 cents below the May contract. In outside markets, the June U.S. dollar index is up 0.30 as the U.S. economy continues to perform well in spite of trade concerns. Non-ag commodities are mixed to lower.

Soybeans:

July soybeans were down 6 cents early Friday, falling back toward the lower end of their sideways range as prices struggle to find any supportive news from the demand side of the market. USDA's weekly export sales report was disappointing Thursday with shipments hitting a new marketing year low and total shipments now dragging along, 13% lower than a year ago. Even though FOB soybean prices are 45 cents cheaper at New Orleans than in Brazil, there is no sign yet that China is interested in buying U.S. soybeans and the 25% tariff proposal remains on the table. It would be a bullish day for U.S. soybean prices, if the dispute with China was ever resolved, but that does not seem likely anytime soon. Outside of the U.S., the combination of China's demand for Brazil's soybeans and Argentina's drought is bullish for soybean prices. Inside the U.S., the outlook for old-crop soybean prices is neutral-to-bearish without China's eager participation. Technically, the trend is sideways in old-crop soybeans with concerns of failing momentum. In new-crop soybeans, the trend is up, but currently stalled. DTN's National Soybean Index closed at $9.68 Thursday, down from its highest prices in over a year and priced 70 cents below the May contract.

Wheat:

July Chicago wheat was down 6 1/2 cents and July K.C. wheat was down 7 1/2 cents, turning lower after three days of higher trading related to ongoing concerns of wildfires in the southwestern U.S. Plains. Light to moderate showers for the region have been anticipated all week and the day has arrived, but there is no moisture yet on Friday morning's weather map, except for a little snow in the Rocky mountains. The rain is expected to begin later Friday and slowly hang around the region into early Sunday. All moisture will be welcome as the region needs a break from wildfires, but there may not be much benefit for drought-weary crops. As serious as this winter's drought has been in the region, the benefit to K.C. wheat prices has been limited by poor foreign and commercials demand for winter wheat. Fundamentally, the outlook for wheat prices remains limited by plentiful global supplies with the wild card of a new season ahead. Technically, the trends remain sideways for all three wheats with winter wheat prices trading at the lower end of their ranges. DTN's National SRW index closed at $4.47 Thursday, down from its highest prices in eight months and 30 cents below the May contract.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman