DTN Early Word Grains

Quiet Grain Start on Friday, OPEC Deliberates

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

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

CME Globex Recap:

August crude oil is trading modestly higher while OPEC meets in Vienna, likely getting ready to announce an increase in oil production. European stocks are a little higher and Dow Jones futures are also pointing to a higher open. Most commodities are starting higher Friday with soybeans showing early profit-taking after another week of lower prices.

OUTSIDE MARKETS:

Thursday's trading saw the Dow Jones Industrial Average drop 196.10 points to 24,461.70 while the S&P 500 was down 17.56 points to 2,749.76 and the 10-year Treasury yield ended at 2.90%. Early Friday, DJIA futures were up 107 points. Asian markets were mixed with Japan's Nikkei 225 down 176.21 points (-0.8%) and China's Shanghai Composite up 13.95 (0.5%). European markets were higher with London's FTSE 100 up 46.73 points (0.6%), Germany's DAX up 50.06 points (0.4%), and France's CAC 40 up 40.03 points (0.7%). The euro was up 0.0036 and the U.S. dollar index was down 0.33 to 94.33. September 30-year T-Bonds were down 9/32nds while August gold was up $0.70 at $1,271.20 and August crude oil was up $0.71 at $66.25. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were up 1.5%.

BULL BEAR
1) Corn's rebound from Tuesday's low is holding so far, supported 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) Thursday's higher close in Chicago wheat was supported by increased commercial buying, possibly related to quality concerns. 3) The trends remain lower for all three wheats, in line with their typical seasonal patterns.

MORE COMMODITY-SPECIFIC COMMENTS

CORN July corn is up 1/4 cent after quietly staying within a narrow range overnight. Friday's weather map is looking drier early and rain chances are mostly confined to Oklahoma to Nebraska over the weekend, moving to Iowa early next week while temperatures stay moderate. This will allow flooded areas in other parts of the Corn Belt a chance to recover, but more rain is expected in the extended forecast for all but the southwestern Corn Belt. Meanwhile, the seven-day forecast remains dry for Brazil and its second corn crop. Market factors are mixed for corn, which is better than we can say for soybeans. Overall, traders continue to treat the current stretch of weather as bearish for prices, but more monitoring is needed with crops getting closer to pollination time. Technically, the trend in corn is still down with crop conditions still seen as generally favorable.

SOYBEANS July soybeans are up 4 3/4 cents Friday, likely some early profit-taking after another week of lower prices, this time hit by Monday's U.S. announcement to hit China with another $200 billion of tariffs, if China doesn't back down from their tariff plans for July 6. So far, there is no sign of either side budging so we have spot soybeans trading at their lowest prices in two years and November soybeans near its low from 2017. Longer-term, these could be seen as buying opportunities, but for the most part, uncertainty about where this escalating trade war is headed is keeping potential buyers away. It also doesn't help soybean prices that U.S. crops are off to a good start, but there is still plenty of growing season ahead. The trend in soybeans is clearly down with lots of uncertainty this summer, keeping the range of price possibilities wide.

WHEAT September K.C. wheat is down 1 3/4 cents with a narrow overnight trading range, a possible sign of quieter trading to come on Friday. Friday's weather map shows scattered showers in southwestern Kansas and around the eastern Midwest where there are concerns about too much rain damaging SRW wheat quality as crops are ready for harvest. While the concerns are legitimate, it is difficult to say they meet the level of bearish concerns that wheat is facing, which is primarily another year of relatively high world wheat production. The spring wheat crop continues to do well and will likely have another high crop rating on Monday after Thursday's U.S. Drought Monitor showed moisture improvement in North Dakota. The trends in all three wheats remain down, coinciding with a seasonal influence that turns down after early July.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.28 $0.00 -$0.29 Jul -$0.027
Soybeans: $8.19 -$0.08 -$0.61 Jul $0.008
SRW Wheat: $4.73 $0.06 -$0.22 Jul -$0.012
HRW Wheat: $4.89 $0.06 -$0.04 Jul $0.014
HRS Wheat: $5.38 $0.00 -$0.14 Jul $0.000

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