DTN Early Word Grains

Soybeans Lower, U.S. Faces More Tariffs

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

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

CME Globex Recap:

Global stock markets and commodities were mostly lower early Thursday with news that Europe, India, and Turkey were all retaliating against the U.S. with tariffs of their own. An active pattern of rain continues to work through the Midwest as grains start Thursday on the defensive.

OUTSIDE MARKETS:

Wednesday's trading saw the Dow Jones Industrial Average drop 42.41 points to 24,657.80 while the S&P 500 was up 4.73 points to 2,767.32 and the 10-year Treasury yield ended at 2.93%. Early Thursday, DJIA futures were down 77 points. Asian markets were mixed with Japan's Nikkei 225 up 137.61 points (0.6%) and China's Shanghai Composite down 39.92 (-1.4%). European markets were mostly lower with London's FTSE 100 up 5.07 points (0.1%), Germany's DAX down 111.61 points (-0.9%), and France's CAC 40 down 22.95 points (-0.4%). The euro was down 0.0070 and the U.S. dollar index was up 0.37 to 95.49. September 30-year T-Bonds were up 8/32nds while August gold was down $9.90 at $1,264.60 and August crude oil was down $1.12 at $64.58. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were down 0.6%.

BULL BEAR
1) Corn's rebound from Tuesday's low is holding so far, likely helped by USDA's lower estimate of world ending corn stocks. 1) U.S. weather remains mostly favorable for row crops and spring wheat.
2) Bullish arguments for soybeans still boil down to hoping for a hot and dry U.S. summer. 2) Uncertainty over trade is keeping potential buyers away from the soybean market -- a bearish dynamic with no solution in sight yet.
3) Wednesday's higher close in Chicago wheat was supported by increased commercial buying interest. 3) The trends have turned lower for all three wheats, in line with their typical seasonal patterns.

MORE COMMODITY-SPECIFIC COMMENTS

CORN July corn is down 1 cent early, still able to stay above Tuesday's low with help from expectations for significantly lower world ending corn stocks in 2018-19. Attention on Brazil has faded, but their second corn crop remains dry and could be in for more reduced estimates before that season is done. Here in the U.S., there has been so much rain lately that local areas of flooding have become a concern. Flood watches are posted in northern Illinois and around the northwestern corner of Iowa. Overall however, the rain is still seen as a benefit for most crops. Thursday morning's export sales report is likely to show more corn shipments, but sales may be light with no daily announcements the past seven days. Technically, the trend in corn is still down with crop conditions still seen as generally favorable.

SOYBEANS July soybeans are down 7 1/2 cents early Thursday with little happening on the trade front to give traders hope that a resolution with China could come about anytime soon. As mentioned for corn above, there has been so much rain around the Midwest that pictures of local flooding have been popping up on Twitter and have become a potential concern, but are still largely seen as secondary to the wider benefits. One result of the recent sharp losses in soybeans is that FOB prices in New Orleans are now 36 cents cheaper than those in Brazil so it will be interesting to see if Thursday morning's USDA report shows any increase in sales or shipments. Otherwise, it continues to be difficult to find bullish hope for soybean prices while potential buyers are content to stay away. The trend in soybeans remains down.

WHEAT September K.C. wheat is down 4 1/2 cents Thursday, still holding support at its lowest prices in three months, but also not finding much fundamental help to trade higher. Recent rains have interrupted harvest activity in Kansas for a while and more heavy rain amounts are in the five-day forecast for both Kansas and the SRW wheat region in the eastern Midwest. Spring wheat areas are also expecting rain, but only light amounts in North Dakota and the Pacific Northwest. Thursday's U.S. Drought Monitor is apt to show moisture improvement this week, but the rain is too late for this winter crop. The trends in all three wheats remain down with not much success expected in USDA's weekly export sales report, due out later this morning.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.28 $0.04 -$0.26 Jul $0.035
Soybeans: $8.27 $0.00 -$0.62 Jul -$0.005
SRW Wheat: $4.67 $0.11 -$0.21 Jul $0.007
HRW Wheat: $4.83 $0.02 -$0.06 Jul -$0.036
HRS Wheat: $5.38 $0.03 -$0.14 Jul -$0.001

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

Todd can be followed throughout the day on Twitter @ToddHultman1

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Todd Hultman