DTN Before The Bell Grain Comments

Corn Holds Firm While Others Fall Back

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

Morning CME Globex Update:

Corn was holding firm early Tuesday, supported by Brazil's dry weather while soybeans and all three wheats were starting the day lower. The Wheat Quality Council's HRW wheat crop tour begins Tuesday and will witness USDA's poor crop ratings up close.

Other Markets:

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

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Corn:

July corn was up 1 1/2 cents early Tuesday, facing a threat of severe weather the next few days from the southwestern Plains to the central Midwest. For most areas of the western Midwest, the next few days' precipitation will be welcome, but of course, damaging winds and hail will not. After Thursday's storms move out, Corn Belt temperatures are expected to be in the 60s and 70s -- more favorable for planting again. Late Monday, USDA said 17% of corn was planted, down from the five-year average of 27%. More progress was evident in Missouri and Illinois while Iowa was 17% planted. Brazil remains a potentially bullish situation with the seven-day forecast still looking dry as the second corn crop nears pollination. Technically, the trend remains sideways in May corn, but prices are at the top of the range and a close above $4.03 would turn the trend up, as it already is in new-crop corn. CME Group reported 576 delivery intentions in May corn early Tuesday. DTN's National Corn Index closed at $3.63 Monday, its highest price in 22 months and priced 38 cents below the July contract. In outside markets, the June U.S. dollar index is up 0.41 after the U.K. posted a weaker-than-expected manufacturing report. The Federal Reserve begins a two-day meeting Tuesday, but is not expected to raise the federal funds rate until June.

Soybeans:

July soybeans were down 3 cents early, still committed to a sideways trading range as U.S. officials prepare to discuss trade issues with China on Thursday. Soybean traders will be especially interested to see if China is willing to alter its proposed 25% tariff on U.S. soybeans, but that will depend on a whole nest of inter-related topics that need to be sorted through. Late Monday, USDA said 5% of soybeans were planted, mainly in southern states and on pace with the five-year average. This week's severe weather described above is apt to keep the pace of corn planting slow, but soils are slowly warming as we start the month of May. So far, U.S. soybean demand has not shown much sign of improvement while China takes advantage of Brazil's record harvest and that is not apt to change this summer as long as trade tensions with China persist. For now, the trend is sideways in old-crop soybeans and up in new-crop soybeans with prices reluctant to make new highs. For May contracts, the CME Group reported 145 delivery intentions for soybeans, 52 for meal, and 265 for soybean oil early Tuesday. DTN's National Soybean Index closed at $9.72 Monday, down from its highest price in over a year and priced 77 cents below the July contract.

Wheat:

July Chicago wheat was down a half-cent and July K.C. wheat was down 3 1/2 cents early Tuesday, easing back from Monday's higher prices as Kansas faces another day of warm and windy weather, leading to severe weather risk through Thursday. Late Monday, USDA said 19% of winter wheat was headed and 33% was rated good-to-excellent, the same as was seen this time of year in 2014. Half of winter wheat in Kansas was rated either poor or very poor. The Wheat Quality Council's HRW wheat tour kicks off Tuesday and will likely confirm USDA's poor crop rating for Kansas. DTN's Mary Kennedy will be on hand, learning what else tour scouts may find and giving us daily reports. Sep Minneapolis wheat is starting down a nickel after USDA also said 10% of spring wheat was planted, which is below the five-year average of 36% for this time of year. South Dakota made a little progress and is 12% planted. Meanwhile, crop conditions in wheat regions outside of North America remain generally favorable with minor exceptions. Technically, the trends remain sideways for all three wheats, continuing to show support from the anticipation of lower production in the U.S. For May contracts, the CME Group reported 159 delivery intentions for K.C. wheat and MGEX reported 152 for Minneapolis wheat early Tuesday. DTN's National SRW index closed at $4.79 Tuesday, its highest price since July and 31 cents below the July contract.

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

FollowTodd on Twitter @ToddHultman1

(KR)

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Todd Hultman