DTN Before The Bell Grain Comments

Soybeans Quiet as Meeting with China Begins

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

Morning CME Globex Update:

July soybeans were down a quarter-cent early as US and Chinese officials meet to discuss trade differences -- a topic that means a lot to US soybean prices. Winter wheat was starting the day lower with rain falling around Oklahoma and the eastern Midwest. At 8 a.m. CDT, USDA announced 30,000 metric tons of soybean oil to Peru in 2017-18.

Other Markets:

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

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Corn:

July corn was unchanged early Thursday, but still near its highest prices in eight months while the seven-day forecast continues to look dry for Brazil. Here in the U.S., rain is falling from Oklahoma and Arkansas up to Michigan early Thursday, with more headed to Iowa later in the day. After Thursday, the Midwest is expected to be mostly dry for five days, allowing better conditions for row crop planting to pick up. USDA has high hopes for US corn exports this season and early Thursday, USDA said last week's sales and shipments of corn totaled 40.2 and 58.0 million bushels respectively, a neutral showing for the week that has total corn shipments down 17% in 2017-18 from a year ago. Thursday's U.S. Drought Monitor showed increased dryness the past week in southern Iowa and eastern North Dakota -- two areas to keep an eye on. Technically, Tuesday's higher close turned the trend up in July corn, in line with what it already was in new-crop corn. CME Group reported 478 delivery intentions in May corn early Thursday. DTN's National Corn Index closed at $3.67 Wednesday, near its highest price in 22 months and priced 38 cents below the July contract. In outside markets, the June U.S. dollar index is down 0.05 while outside commodities are mixed.

Soybeans:

July soybeans were down a quarter-cent early Thursday, treading water as officials from the US and China meet in Beijing to discuss trade differences. The difficult part of this situation is that no one seems confident about what to expect, yet the stakes for US soybean prices are high. While a tariff on US soybeans would also hurt Chinese interests, it is possible that China will stick to its proposal to keep political leverage on the White House. On the other hand, any backing away from China's proposed tariff would be seen as bullish for US soybean prices. Meanwhile, China has Brazil's record harvest to count on for a while and does not need US soybeans. Early Thursday, USDA said last week's export sales and shipments of soybeans totaled 15.3 and 25.4 million bushels respectively, a neutral-to-bearish performance that kept total soybean shipments down 13% in 2017-18 from a year ago. Details showed that China reneged on a 4.9 million bushel sale of old-crop soybeans. At 8 a.m. CDT, USDA announced 30,000 metric tons of soybean oil to Peru in 2017-18. For now, the trend is sideways in old-crop soybeans and up in new-crop soybeans with traders leery of trade talks with China. For May contracts, the CME Group reported 68 delivery intentions for soybeans, 4 for meal, and 280 for soybean oil early Thursday. DTN's National Soybean Index closed at $9.68 Wednesday, down from its April high and priced 75 cents below the July contract.

Wheat:

July Chicago wheat was down a nickel and July K.C. wheat was down 4 1/2 cents with rain falling in Oklahoma and across the eastern Midwest. Day two of the Wheat Quality Council's HRW wheat tour estimated a yield of 35.2 bushels an acre, down from 46.9 bushels a year ago. The Oklahoma Panhandle was in especially tough shape from drought, while some of the best fields to date were seen in Sumner County Kansas, just south of Wichita. Overall, the fields of Kansas continue to reflect the 50% poor-to-very poor crop rating that USDA assigned late Monday. There are still areas that could improve with help from this month's weather, but so far, the seven-day forecast remains mostly dry for the southwestern Plains. Outside of North America, dry conditions in Australia are a concern, but other major wheat regions are mostly favorable. With plenty of wheat available around the world, US exports have suffered this season. Early Thursday, USDA said last week's export sales and shipments totaled 8.6 and 10.4 million bushels respectively, another bearish showing that put total wheat shipments down 12% in 2017-18 from a year ago. Technically, Tuesday's higher closes turned the trends higher for the July contracts of both, Chicago and K.C. wheat. For May contracts, early Thursday showed 86 delivery intentions for K.C. wheat, none for Minneapolis wheat, and still none for Chicago wheat. DTN's National SRW index closed at $4.93 Tuesday, its highest price in nine months and 36 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