DTN Before The Bell Grain Comments

Morning CME Globex Update:

July contracts of corn, soybeans and winter wheat were starting a little higher Monday with K.C. wheat up 4 3/4 cents after the southwestern Plains saw mostly light rain amounts over the weekend. Outside commodities are lower with the U.S. dollar index trading at its highest price in seven weeks.

Other Markets:

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

Corn:

July corn was up 1 1/4 cents early Monday, a modest show of bargain-hunting after dropping to its lowest prices in three weeks on Friday. Monday afternoon's Crop Progress report is apt to show only limited planting progress as temperatures stayed cold most of last week. Some snow is still around in Minnesota and Wisconsin, but that should disappear this week with highs in the 60s expected across most of the Corn Belt. One of the concerns for corn prices is the heavy amount of noncommercial net longs that came as a result of Argentina's drought. Friday's CFTC data showed noncommercial net-longs dropped from 382,304 to 340,060 as of Apr. 17 as prices fell back from their April high. More liquidation is likely ahead, especially as the forecast for planting is looking better in May. Fundamentally, the outlook for corn prices remains neutral with 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 $3.45 Friday, 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 0.37 as the June 10-year T-notes continue to slide to new contract lows, aka higher interest rates.

Soybeans:

July soybeans were up 1 1/2 cents early Monday, treading water after falling to its lowest price in two weeks on Friday. On one hand, U.S. soybean prices are holding up well, considering China has proposed a 25% tariff on U.S. soybeans. On the other hand, U.S. soybean prices have fallen five of the past six sessions as export demand is visibly hurt by China's lack of eager participation and higher ending stocks estimates from USDA may be ahead for 2017-18. Friday's CFTC data showed noncommercials increased net longs in soybeans from 210,265 to 224,357 as of Apr. 17, the most bullish position they have held since July 2016. Granted, the fundamental outlook for soybean prices is bullish outside the U.S. where a combination of Argentina's drought and strong Chinese demand for Brazil's soybeans has lifted Brazil's FOB price to its highest level in over a year and a half. Here in the U.S., the fundamental outlook is neutral to bearish for old-crop soybean prices while China keeps its purchases minimal. 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 $9.59 Friday, near the middle of its range in April and priced 70 cents below the May contract.

Wheat:

July Chicago wheat was up 2 1/4 cents and July K.C. wheat was up 4 3/4 cents early, showing slight adjustments to last week's lower prices after rain amounts in the southwestern U.S. Plains were fairly light over the weekend. More light amounts are expected in the region this week, but nothing to make us believe that drought is not still a serious concern. While winter wheat production will be down in the U.S. in 2018, major wheat regions outside of North America are doing well. Wheat in Europe, Ukraine, and southern Russia have adequate soil moisture and are expecting warmer temperatures this week. China was on the edge of being dry, but received beneficial rain over the weekend. Friday's CFTC data showed noncommercials increased net longs in K.C. wheat slightly to 48,887 as of Apr. 17, holding firm in their moderate bullish opinions even though prices dropped 41 cents that week. 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 $4.33 Friday, near the middle of its range in April 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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