DTN Before The Bell Grain Comments

Crop Prices Lower, Weather Mostly Favorable

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

Morning CME Globex Update:

July contracts of corn, soybeans, and all three wheats were starting lower Monday, adding to last week's declines while crop conditions are mostly favorable in the U.S., outside of the southwestern Plains. At 8 a.m. CDT, USDA announced 4.2 million bushels of new-crop soybeans were sold to Mexico.

Other Markets:

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

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Corn:

July corn was down 4 cents early Monday, continuing last week's decline while crop conditions remain mostly favorable across the Corn Belt. Temperatures will be in the 90s in the western Corn Belt this week, but the seven-day forecast has chances for moderate to locally heavy showers across most of the region, which will offset much of the heat. In Brazil, the second corn crop remains mostly dry with chances for light showers in southern Brazil. Friday's CFTC data showed noncommercials in corn still bullish, but holding a slightly smaller position of 392,609 net longs as of May 29. The position is still close to speculators' largest holding of net longs since 2011 and is a bearish threat as prices are dropping to new lows. Technically, the trends in corn have turned lower for both, old-crop and new-crop corn, changes that will be confirmed if Monday's closes stay below their lowest prices in May. DTN's National Corn Index closed at $3.59 Friday, down from its highest price in 23 months and 32 cents below the July contract. In outside markets, the June U.S. dollar index is down 0.38 as last week's concerns about Italy ease.

Soybeans:

At 8 a.m. CDT, USDA announced 4.2 million bushels of new-crop soybeans were sold to Mexico. July soybeans were down 9 3/4 cents earlier with traders showing disappointment after another weekend of trade talks with China showed no progress. In fact, the talks may have taken a step backward as China now says it will not fulfill previous promises to buy more U.S. goods after the U.S. enacted more tariffs last week. Favorable early crop conditions in the U.S. are also a bearish influence on soybean prices and this week's forecast expects a generous coverage of moderate to locally heavy rain across the Midwest, starting Wednesday. USDA will release its first crop ratings for soybeans later Monday afternoon and the good-to-excellent numbers are likely to be high. Friday's CFTC data showed noncommercials in soybeans increased net longs from 143,470 to 150,233 as of May 29, but fundamentally, it is difficult to understand their optimism as demand for old-crop soybeans remains lower than a year ago and early crop conditions are favorable. Technically, the sideways trend in Nov soybeans is holding firm, but new-crop spreads show a weakening of bullish inverses. The trend in July soybeans is also sideways, but appears to be weakening as demand for old-crop soybeans remains a bearish concern. DTN's National Soybean Index closed at $9.56 Friday, priced 66 cents below the July contract and staying below major resistance at $10.00.

Wheat:

July Chicago wheat was down 8 1/2 cents and July K.C. wheat was down a dime, continuing last week's declines while world wheat production outside of North America appears to be going well overall, watching some concern around the Black Sea. Here in the U.S., the seven-day forecast shows chances for beneficial rains over spring wheat crops in the northwestern Plains, while rain chances for winter wheat in the southwestern Plains remain light and temperatures stay hot. Friday's CFTC data showed noncommercials increased net longs in Chicago wheat from 41,849 to 45,129 as of May 29. It has not worked out well for speculators the last five times they tried the long side of Chicago wheat and that may be true again as last week's prices fell back from their one-year highs. Technically, the trends are still higher for all three wheats, but more sideways paths may be in store after prices failed to sustain recent tests above resistance. DTN's National SRW index closed at $4.96 Friday, down from its highest price in ten months and 27 cents below the July contract.

Todd Hultmancan be reached at todd.hultman@dtn.com

Follow him on Twitter: www.twitter.com/ToddHultman1

(KR)

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Todd Hultman