DTN Closing Grain Comments

Bearish Pressure Stays Heavy on Row Crops

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
Connect with Todd:
(DTN illustration by Nick Scalise)

General Comments:

Corn was down 10 1/2 cents in the July contract and down 9 3/4 cents in the December. Soybeans were down 15 1/2 cents in the July contract and down 16 cents in the November. Wheat closed down 5 1/2 cents in the July Chicago contract, up 3 1/2 cents in the July Kansas City, and down 2 3/4 cents in the July Minneapolis contract.

The June U.S. dollar index is up 0.02 at 93.56. August gold is up $1.00 at $1,303.70 while July silver is up 21 cents and July copper is down $0.0005. The Dow Jones Industrial Average is up 51 points at 25,367. July crude oil is up $0.42 at $66.16. July heating oil is down $0.0022 while July RBOB gasoline is down $0.0102 and July natural gas is up $0.051.

Corn:

July corn dropped 10 1/2 cents to a new four-month low at $3.67 1/4 Monday, likely encountering more noncommercial liquidation after a weekend of beneficial rains fell, followed by more rain expected in the seven-day forecast for the Corn Belt. The past seven days have seen broad rain coverage across much of the Corn Belt, adding to the notion that USDA's crop ratings for corn, soybeans, and spring wheat will likely stay high again in Monday afternoon's Crop Progress report. Friday's CFTC data showed noncommercials in corn holding 330,039 net longs as of June 5, still a lot of positions losing money that need to be liquidated. Monday morning, USDA said 55.5 million bushels of corn were inspected for export last week, putting total inspections down 10% in 2017-18 from a year ago with a slim chance of reaching USDA's 2.225 billion bushel export estimate. Tuesday's WASDE report is not expected to show much change in U.S. estimates for corn, but USDA's estimate of Brazil's corn crop should come down, due to dry weather that is still going on. Technically, the trends remain down for both, old-crop and new-crop corn and are keeping stress on noncommercials caught heavily long. DTN's National Corn Index closed at $3.46 Friday, down sharply from its highest price in 23 months and 32 cents below the July contract. In outside markets, the June U.S. dollar index is up 0.02 after the weekend's G-7 meeting was strained and as the Federal Reserve prepares to make another interest rate decision on Wednesday.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Soybeans:

July soybeans lost another 15 1/2 cents Monday, falling to $9.53 3/4, their lowest close in ten months. As with corn, early crop conditions are also favorable for U.S. soybeans and Friday's CFTC data showed noncommercial net longs at 330,039, a substantial number under pressure to liquidate. The southwestern Plains are experiencing hot temperatures, but the bulk of the Midwest has moderate summer temperatures with rain in the forecast. Monday morning, USDA said 23.7 million bushels of soybeans were inspected for export, a neutral showing that kept total inspections down 8% in 2017-18 from a year ago. Meanwhile, no significant progress in trade talks with China is being reported. Tuesday's WASDE report may trim the U.S. export estimate a little, but otherwise is not likely to show much change from May's numbers. Unless weather comes up with a summer surprise, it is difficult to find any bullish argument for soybean prices at this time. Last week's lower closes turned the trend lower for both old-crop and new-crop soybeans and also saw the bullish inverse disappear from the Nov/Mar spread. DTN's National Soybean Index closed at $9.04 Friday, priced 65 cents below the July contract and near its lowest price in ten months.

Wheat:

July Chicago wheat closed down 5 1/2 cents and July K.C. wheat was down 3 1/2 cents at $5.34 3/4 Monday, holding somewhat firm in the face of row crop selling. Tuesday's WASDE report will show a new winter wheat crop estimate from USDA, but Dow Jones' survey of analysts only expects a tiny 5 million bushel reduction to 1.187 billion bushels for 2018-19. The all wheat estimate for U.S. production is expected to stay higher than a year ago, at 1.82 billion bushels in spite of this year's drought in the southwestern Plains. Spring wheat, on the other hand, is experiencing greener fields and will likely receive another high crop rating from USDA on Monday afternoon, adding to bearish pressure in Minneapolis wheat. Outside of the U.S., dryness remains a concern in Ukraine and southern Russia while Europe appears to be doing well. Technically, the trends remain up for Chicago and K.C. wheats, even though prices failed to sustain recent tests above resistance. The seasonal high for winter wheat prices typically arrives around early July, making this a suspicious time for wheat's uptrends. DTN's National SRW index closed at $4.94 Friday, down from its highest price in ten months and 27 cents below the July contract. DTN's National HRW index closed at $5.18, 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

(BE)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Todd Hultman