DTN Closing Grain Comments

Soybean Meal Ends Week With Bullish Charge

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

General Comments:

Corn closed up 3 1/4 cents in the July contract and was up 3 1/4 cents in the December. Soybeans closed up 16 3/4 cents in the July and up 13 3/4 cents in the November. Wheat closed up 9 cents in the July Chicago, up 9 1/2 cents in the July Kansas City, and up 4 cents in the July Minneapolis. The June U.S. dollar index is up 0.01 at 91.37. June gold is up $6.50 at $1,324.40 while May silver is down 5 cents and May copper is down $0.0680. The Dow Jones Industrial Average is down 8 points at 24,314. June crude oil is down $0.21 at $67.98. June heating oil is down $0.0105 while June RBOB gasoline is up $0.0069 and June natural gas is down $0.067.

For the week:

July corn closed up 13 cents and December was up 12 cents. July soybeans were up 16 cents while the November was up 12 cents. July Chicago wheat was up 21 1/4 cents, July Kansas City wheat was up 28 1/2 cents, and July Minneapolis wheat was up 2 1/4 cents.

Corn:

July corn closed up 3 1/4 cents at $3.98 1/2 Friday and was up 13 cents on the week, helped by increasingly dry conditions in Brazil as the second corn crop approaches pollination and by Friday's higher soybean prices. Brazil's corn hasn't had much rain the past two weeks and the seven-day forecast continues to look dry ahead -- a potentially bullish development that deserves monitoring. Here in the U.S., the Corn Belt will be mostly warm and dry until the middle of next week when a broad coverage of showers and some severe weather are expected to visit the region. Numerous Twitter reports suggest planting picked up this week, but the overall pace is still likely to be slower than usual with next week's temperatures expected to be on the cool side in the Eastern Corn Belt. It is too cold to plant in Canada, but early Friday, Statistics Canada estimated 3.8 million planted acres of corn in 2018, up 5% from a year ago. With USDA estimating Argentina's corn crop 20% lower than a year ago, Brazil's dry spell carries added weight and will have much to say about where U.S. corn exports go the rest of this year. If Brazil's bullish concerns don't pan out, the outlook for corn prices remains neutral with plenty still to learn about the new U.S. growing season ahead. Technically, the trend remains sideways in May corn and up in new-crop corn. DTN's National Corn Index closed at $3.56 Thursday, back near its highest prices since June 2016 and priced 30 cents below the May contract. In outside markets, the June U.S. dollar index is up 0.01 after the U.S. Commerce Department said first quarter GDP was up 2.9% from a year ago, more than expected. It was also worth noting that Korea's two leaders announced an agreement to work toward peace in advance of President Trump's trip to North Korea.

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Soybeans:

July soybeans were down 9 cents shortly after the 8:30 open, but then quickly reversed higher, closing up 16 3/4 cents on the day and salvaging a 16-cent gain on the week. What exactly turned prices higher so quickly is up for debate, but it is likely related to Argentina's drought as commercial buying in Dec soybean meal took prices up $9.30, near to its April high. Another explanation for Friday's higher price could have been optimism that Treasury Secretary Mnuchin will have some form of success in easing trade tensions with China when he visits next week. The current trade dispute with China has been a bearish factor for soybean prices up to this point, but the flip side of the issue is that any resolution could spark a rally similar to what was seen Friday. Here in the U.S., corn planting should be making better progress this week and that is easing concerns about acres needing to make a late switch to soybeans. To the north, Statistics Canada estimated 6.5 million acres of soybean plantings in 2018, down 11% from a year ago and lower than expected. That was a minor bullish surprise in a year when the outlook for soybean prices is bullish outside the U.S. Friday's outside reversal in soybeans is a fresh bullish clue while the trend is sideways in old-crop soybeans and still up in new-crop soybeans. DTN's National Soybean Index closed at $9.60 Thursday, roughly in the middle of its April range and priced 68 cents below the May contract.

Wheat:

July Chicago wheat closed up 9 cents and July K.C. wheat was up 9 1/2 cents at $5.30 1/2, still not seeing much rain in the seven-day forecast for the western side of the southwestern U.S. Plains. The Wheat Quality Council's HRW wheat tour begins next week and scouts won't be surprised to see tough conditions in Kansas where USDA has estimated 49% of crops as either poor or very poor. However, tour scouts are good at finding more details along the way and we will have daily reports from DTN's Mary Kennedy to help out. Sep Minneapolis wheat traded lower early Friday after Statistics Canada estimated a 15% increase in spring wheat acres, but finished 3 1/2 cents higher, salvaging a 2 3/4 cent gain on the week. All wheat acres in Canada are expected to total 25.3 million, a 13% increase in 2018. Outside of North America, there are concerns of dryness in Australia and part of China, but overall early crop conditions are favorable. Fundamentally, it is going to be difficult for wheat prices to make new highs as long as the major wheat regions are doing well. Technically, the trends remain sideways for all three wheats with spring wheat near the lower end of its range. DTN's National SRW Index closed at $4.51 Thursday, near its high for April and 30 cents below the May contract. DTN's HRW Index closed at $4.56, down from its highest price in two years.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman