DTN Early Word Grains

Row Crops Start with Early Bounce

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

July corn was up 3 1/4 cents, July soybeans were up 7 1/2 cents, and July Kansas City (HRW) wheat was up 1/4 cent.

CME Globex Recap:

World stock markets were mostly higher and the U.S. dollar index roughly steady after the U.S. and North Korea signed an agreement aimed at denuclearizing the Korean peninsula. Outside commodities were mixed with gold a little lower and crude oil a little higher. After encountering sharp selling in early June, corn and soybeans were starting higher early Tuesday, possible profit-taking ahead of Tuesday's 11 a.m. CDT WASDE report.

OUTSIDE MARKETS:

Monday's trading saw the Dow Jones Industrial Average close up 5.78 points at 25,322.31 and the S&P 500 up 2.97 points to 2,782.00, while the 10-year Treasury yield ended at 2.96%. Early Tuesday, DJIA futures were down 26 points. Asian markets were higher with Japan's Nikkei 225 up 74.31 points (0.3%) and China's Shanghai Composite up 27.02 points (0.9%). European markets were mixed with London's FTSE 100 down 22.76 points (-0.3%), Germany's DAX up 1.45 points (0.1%), and France's CAC 40 down 11.15 points (-0.2%). The euro was up 0.0005 and the U.S. dollar index was down 0.08 to 93.53. June 30-year T-Bonds were steady while August gold was down $1.20 to $1,302.00 and July crude oil was up $0.16 at $66.26. China's Dalian soybeans were steady to lower and Malaysian palm oil futures were down 1.4% overnight.

BULL BEAR
1) It doesn't seem to matter to traders, but dry conditions remain a concern in Brazil and northern China. 1) New lows in corn and soybean futures as U.S. row crops continue to show favorable growing conditions in early 2018.
2) Bullish arguments for soybeans are difficult to find, but the seasonal high typically arrives around early July. 2) Noncommercial accounts are losing money fast and pressure is on to liquidate long positions in corn and soybeans.
3) Winter wheat conditions are increasingly dry in Ukraine and southern Russia with not much rain in this week's forecast. 3) Spring wheat conditions are favorable early with rain expected in the northwestern Plains and western Canadian Prairies.

The weekly Newsom on the Market column can be found on subscription sites only. On DTN Pro it is in News/Town Hall and on MyDTN in News/Columns.

MORE COMMODITY-SPECIFIC COMMENTS

CORN July corn is up 3 1/4 cents early Tuesday, starting the day with a bounce after plunging to a new four-month low on Monday. Outside markets are generally quiet and seem to be accepting the news of a signed agreement with North Korea without much fanfare. Closer to home, spots around the Midwest continue to receive beneficial rains with morning showers around North Dakota, Missouri, and Illinois. Tuesday's new seven-day forecast expects moderate to heavy amounts from Montana to Wisconsin, but lighter amounts elsewhere. Hot temperatures remain confined to the southwestern Plains, but will reach Iowa later this week. Late Monday, USDA said 77% of corn was rated good-to-excellent, down a point from last week, but still the highest rating since 2007. Tuesday's WASDE report is not expected to bring much change to USDA's estimates or the price of corn. Traders will be watching for a drop in Brazil's corn crop estimate. July corn prices have had a sharp sell-off and may find support near the 2018 low of $3.62.

SOYBEANS July soybeans are up 7 1/2 cents early Tuesday, possible profit-taking after falling to a new ten-month low on Monday. As described for corn above, conditions around the Midwest are mostly favorable for crops at this time, but there are pockets of dry areas that could get worse if rain coverage falls short. Late Monday, USDA said 93% of soybeans were planted and 83% were emerged, ahead of their usual paces. 74% of soybeans were rated good-to-excellent, down one point from last week and the same rating it had in 2016 at this time. Tuesday's WASDE report is not expected to show much change from May's report, but we may a small reduction in the estimate of U.S. soybean exports. USDA's Grain Stocks and Acreage report on June 29 is likely to pack a bigger punch for prices. For now, the trend remains down for old-crop and new-crop soybeans, while the market lacks a bullish argument.

WHEAT July K.C. wheat is up a quarter-cent Tuesday, holding roughly sideways the past month while traders assess a new season of world wheat production. Temperatures remain hot in the southwestern Plains and the forecast is mostly dry, except for moderate rain expected in Kansas. Late Monday, USDA said 91% of winter wheat was headed and 14% was harvest with drought-stricken wheat coming off the fields quickly in Texas and Oklahoma. 47% of winter wheat in Kansas was rated either poor or very poor. Spring wheat continues to do well with 70% of crops rated good to excellent. The only trouble spot is in Idaho where 12% of the crops are rated poor or very poor. Outside of North America, wheat crops look good in Europe, but are still on the dry side in Ukraine and southern Russia. Spot K.C. wheat prices remain near their highest level in a year, but show little sign of breaking outside of May's trading range.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.36 -$0.10 -$0.31 Jul $0.007
Soybeans: $8.89 -$0.16 -$0.65 Jul $0.000
SRW Wheat: $4.88 -$0.05 -$0.26 Jul $0.004
HRW Wheat: $5.18 $0.00 -$0.17 Jul $0.035
HRS Wheat: $5.75 -$0.03 -$0.15 Jul -$0.006

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

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Todd Hultman