DTN Before The Bell Grain Comments

Morning CME Globex Update:

July corn and winter wheat were slightly lower while July soybeans were a little higher early Thursday, as traders wait for USDA's next WASDE report at 11 a.m. CDT. USDA's report of weekly exports was neutral for corn and continued to lean bearish for soybeans and wheat.

Other Markets:

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

Corn:

July corn was down a quarter-cent early, ahead of USDA's May WASDE report, due out at 11 a.m. CDT. Dow Jones' survey is expecting USDA to estimate new-crop ending U.S. corn stocks at 1.63 billion bushels (bb), based on a 14.1 bb crop. With planting progress now picking up and most of the Corn Belt showing good soil moisture, the survey's estimate seems too low, but there are many months of adjustment ahead. Conditions will change though and Thursday's U.S. Drought Monitor did show increased dryness in central Missouri, western Illinois and northwestern Minnesota. The main bullish potential for corn prices continues to come from Brazil where second-crop corn is still dry. South-central Brazil has a chance for moderate rain amounts later in the next several days, but the forecast for Mato Grosso remains mostly dry. The demand side of corn has improved lately, and early Thursday, USDA said last week's export sales and shipments of corn totaled 27.4 million bushels (mb) and 70.3 mb respectively, neutral amounts for the week. Total corn shipments are now down 14% in 2017-18 from a year ago with four months left in the season. Technically, the trends remains up in both, July and new-crop corn. May corn showed 1,126 contracts of open interest early Thursday. DTN's National Corn Index closed at $3.67 Wednesday, still near its highest price in 22 months and priced 35 cents below the July contract. In outside markets, June crude oil is up 47 cents after BBC News reported Israel's military said rockets were fired into the Golan Heights and they responded with a strike against Iran's military in Syria.

Soybeans:

July soybeans were up 3 1/2 cents early with traders facing a wide range of possibilities over what USDA might say in Thursday's report. Dow Jones' survey is looking for new-crop U.S. ending soybean stocks of 549 mb, which is near last month's old-crop estimate and based on a 4.3 bb crop in 2018. However, neither ending stocks estimate seems to be taking into account this year's lack of eager participation from China or the possibility of a 25% tariff on U.S. soybeans. The potential for more bearish adjustments down the road is making it difficult for old-crop soybeans to trade higher. Early Tuesday, USDA said last week's export sales and shipments of soybeans totaled 13.0 mb and 17.3 mb, a neutral-to-bearish combination that has total soybean shipments down 12% from a year ago. Technically, the trend is down in July soybeans but still sideways in new-crop soybeans where futures spreads show a bullish commercial outlook. Among May contracts, the CME Group reported 57 delivery intentions for soybeans, but none for meal and soybean oil early Thursday. DTN's National Soybean Index closed at $9.44 Wednesday, up from its lowest price in over two months and priced 71 cents below the July contract.

Wheat:

July Chicago wheat was down 1 1/4 cents and July Kansas City wheat was down 1/4 cent while light showers are falling around southern Kansas and Oklahoma Thursday morning. Severe drought in the southwestern Plains has been the bullish influence for wheat prices early in 2018 and Dow Jones' survey expects USDA to estimate this year's winter wheat crop at 1.18 bb, down from 1.27 bb a year ago. While there is probably room for that estimate to go lower, it is not worth arguing while most of the world's wheat regions are doing well and the International Grains Council is estimating 27.2 bb of global wheat production, down slightly from last year's record world crop. Abundant old-crop global supplies have made it difficult for the U.S. to generate export business this season and that is not changing. USDA said last week's export sales and shipments of wheat totaled 1.3 mb and 11.8 mb respectively, another bearish showing that puts total wheat shipments down 13% in 2017-18 from a year ago with one month remaining in the old season. Technically, the trends turned higher last week for the July contracts of both, Chicago and K.C. wheat. There were no deliveries for May wheat contracts early Thursday and May K.C. wheat has 330 contracts still open. DTN's National SRW index closed at $4.79 Wednesday, down from its highest price in nine months and 32 cents below the July contract.

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

FollowTodd on Twitter @ToddHultman1

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