DTN Closing Grain Comments

General Comments:

Corn closed down 5 1/2 cents in the July contract and was down 5 cents in the December. Soybeans closed down 18 cents in the July and down 16 3/4 cents in the November. Wheat closed down 7 3/4 cents in the July Chicago, down 9 cents in the July Kansas City and down 4 cents in the July Minneapolis.

The June U.S. dollar index is down 0.10 at 92.42. June gold is down $1.70 at $1,320.60 while July silver is down 2 cents and July copper is unchanged. The Dow Jones Industrial Average is up 52 points at 24,792. June crude oil is down $0.49 at $70.87. June heating oil is up $0.0057 while June RBOB gasoline is up $0.0045 and June natural gas is down $0.008.

For the week:

July corn closed down 9 3/4 cents and December was down 6 1/2 cents. July soybeans were down 33 1/2 cents while the November was down 23 cents. July Chicago wheat was down 27 1/2 cents, July Kansas City wheat was down 37 3/4 cents, and July Minneapolis wheat was down 18 cents.

Corn:

July corn fell 5 1/2 cents to $3.96 1/2 Friday and was down nearly a dime on the week, falling back from last week's new eight-month high while rain crossed south-central Brazil for the first time in several weeks. Even so, the seven-day forecast still remains mostly dry, especially for Mato Grosso, Brazil's top-producing state for second crop corn. Thursday's new-crop ending corn stocks estimates from USDA looked pretty rosy for corn with USDA expecting world corn stocks to drop from 194.85 million metric tons (mmt) (7.67 billion bushels) in 2017-18 to 159.15 mmt (6.27 bb) in 2018-19. It does help that Argentina was in drought this year, and dry weather is a threat in Brazil. However, there is still plenty of time and USDA's 14.0 bb U.S. crop estimate is at risk of needing to go higher, especially if U.S. weather cooperates again in 2018. Fundamentally, the outlook for corn prices remains neutral until we get more evidence of the new season ahead. Technically, the trends remains up in both July and new-crop corn. May corn had 33 deliveries and showed 571 contracts of open interest early Friday. DTN's National Corn Index closed at $3.67 Thursday, still near its highest price in 22 months and priced 35 cents below the July contract. In outside markets, the June U.S. dollar is down 0.10 while other commodities are mostly lower.

Soybeans:

July soybeans dropped 18 cents Friday to $10.03 1/4, finishing the week down 33 1/2 cents at its lowest close in three months, as the growing awareness of poor U.S. soybean demand overwhelmed Thursday's overly-optimistic ending stocks estimates for 2018-19. USDA's WASDE report increased the old-crop estimate of crush demand by 20 million bushels (mb), which was reasonable, but also kept the soybean export estimate unchanged even though U.S. soybean shipments are down 12% on the year and have little hope for improvement the next four months. There is also a fair chance that soybean plantings will hit another record high this year, more than USDA's estimate of 89.0 million acres (ma). With noncommercials heavily net-long in soybeans, Friday's selling will increase pressure to liquidate. The most bullish thing to be said for soybeans at this time is that new-crop prices are still holding sideways with support from a bullish inverse in the November/March spread. The trend in old-crop soybeans remains down. Among May contracts, the CME Group reported 68 delivery intentions for soybeans, 45 for soybean oil and none for meal early Friday. DTN's National Soybean Index closed at $9.50 Thursday, up from its lowest price in over two months and priced 71 cents below the July contract.

Wheat:

July Chicago wheat closed down 7 3/4 cents and July Kansas City wheat was down 9 cents to $5.18, the sixth consecutive drop since prices hit a new nine-month high on May 3. Serious drought in the southwestern Plains has given winter wheat prices a helpful lift in early 2018, but the timespan of that bullish influence appears to be waning as attention turns increasingly toward this year's prospects for world wheat production. In Thursday's report, USDA estimated 27.5 bb of world wheat production, a small drop from last year's record high, which will likely result in slightly lower world ending stocks of 9.7 bb. There is some concern of possible dryness in Ukraine and southern Russia that bears watching, but no serious threat to the world crop is seen yet. Technically, the trends are higher for the July contracts of both, Chicago and K.C. wheat, but it is going to be difficult for prices to make new highs without some kind of weather help outside of North America. There were 41 deliveries for May Chicago wheat early Friday. DTN's National SRW index closed at $4.75 Thursday, down from its highest price in nine months and 31 cents below the July contract. DTN's National HRW index closed at $4.85 Thursday, down from its highest price in over two years.

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

Follow Todd Hultman on Twitter @ToddHultman1

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