DTN Early Word Grains
Grains Starting Report Day on the Green Side
December corn was up 2 1/2 cents, November soybeans were up 2 cents, and September Kansas City (HRW) wheat was up 5 1/4 cents.
CME Globex Recap:Global markets are broadly higher after BBC News reported China eased restrictions on foreign investments in specific industries, which include banking, autos, and agriculture. Most commodities are also starting higher Friday, including the grain sector ahead of USDA's Acreage and Grain Stocks reports, due out at 11 a.m. CDT.
OUTSIDE MARKETS:Previous closes on Thursday showed the Dow Jones Industrial Average up 98.46 points at 24,216.05 and the S&P 500 up 16.68 points at 2,716.31 while the 10-year Treasury yield ended at 2.85%. Early Friday, DJIA futures were up 94 points. Asian markets were higher with Japan's Nikkei 225 up 34.12 points (0.1%) and China's Shanghai Composite up 60.52 (2.2%). European markets were also higher with London's FTSE 100 up 64.89 points (0.9%), Germany's DAX up 145.53 points (1.2%), and France's CAC 40 up 70.20 points (1.3%). The euro was up 0.0102 and the U.S. dollar index was down 0.47 at 94.85. September 30-year T-Bonds were up 5/32nds while August gold was up $1.30 at $1,252.30 and August crude oil was down $0.06 at $73.39. Soybeans on China's Dalian Exchange were steady to higher and Malaysian palm oil futures were down 0.8%.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | On Friday, we will see if USDA has any surprising hiding in their reports -- bullish or bearish. | 1) | Flooding reports aside, U.S. crop ratings will likely maintain a high trajectory for row crops and spring wheat on Monday. |
| 2) | BBC News reported China eased foreign investment rule on specific industries -- a possible step toward trade resolution. | 2) | In spite of a recent $1.50 drop in Nov. soybean prices, commercials show no sign of increased buying yet. |
| 3) | Even if the odds seem slim, a surprise of adverse weather this summer or unexpected trade agreement would put shorts on their heels. | 3) | Trends remain lower for all three wheats with limited weather threats so far in 2018. |
CORN December corn is up 2 1/2 cents early Friday with USDA's Acreage and Grain Stocks report due out at 11 a.m. CDT. Due to favorable weather in May, the planting estimates are not likely to be controversial, but June 1 grain stocks are always difficult to predict, even in the best of years, so surprises are possible. Aside from Friday's reports, the other big news of the day is that China took a step toward trade resolution, easing restrictions on foreign investments in specific industries, which include banking, autos, and agriculture, BBC News reported. That encouraged investors early Friday to show green quotes in major stock markets and most commodities, including grains. Here in the U.S., even though corn crop conditions are generally favorable, more rain in the seven-day forecast for the north-central U.S. where flooding is a problem is not good news for producers in those areas. We are also likely to see hotter temperatures in the Corn Belt next week as pollination gets going. Technically, the trend in corn is still down, but USDA's outlook for lower world corn supplies in 2018-19 should help prices find support.
SOYBEANS November soybeans are up 2 cents early, a slight bullish reaction to China's news that is likely offset by nervousness over what USDA might say in Friday's reports. Normally, we would expect a larger bullish response in soybeans to China's news as it is a sign of moving toward the middle of differences with the U.S. and comes just one week ahead of the day China is expected to launch its 25% tariff on U.S. soybeans. On the other hand, it is understandable that traders would want to get past Friday's USDA's reports as there is potential for bearish numbers in both plantings and June 1 soybean stocks. It is also fair to say that the rift between China and the U.S. still has a long way to go, so yes, there are good reasons not to jump blindly into the long side of soybeans. That said, Friday's news does give shorts a reason to be nervous that we have not seen since May. As with corn, rain in the forecast remains a concern for flooded areas, especially around Iowa and Minnesota. Friday's trading is likely to turn volatile after 11 a.m. CDT, but so far, the trend in soybeans remains clearly down.
WHEAT September K.C. wheat is up 5 1/4 cents with encouragement from commercial buying ahead of Friday's USDA reports. The reports themselves are not likely to have much impact on prices as few will be surprised if June 1 wheat stocks turn out a little higher than expected. Recent difficulties with too much rain have tainted the SRW wheat harvest with quality concerns. Early Friday, July Chicago wheat is trading up 7 cents, within a couple cents of the September price and showing only one delivery intention overnight. The situation reflects commercial buying interest for SRW wheat and is helping to keep prices above their three-month low at a time when the larger fundamental picture remains bearish for wheat. Wheat is also getting help early Friday from outside markets as the September U.S. dollar index is trading down 0.47. For wheat, the large factors remain bearish and the trends are clearly down for all three, but there is enough uncertainty to encourage two-way trading.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.19 | -$0.07 | -$0.35 | Sep | $0.010 |
| Soybeans: | $8.02 | -$0.06 | -$0.65 | Aug | $0.004 |
| SRW Wheat: | $4.57 | -$0.01 | -$0.26 | Sep | $0.036 |
| HRW Wheat: | $4.54 | -$0.05 | -$0.18 | Sep | $0.011 |
| HRS Wheat: | $5.12 | -$0.04 | -$0.26 | Sep | -$0.005 |
Todd Hultman can be reached at todd.hultman@dtn.com
Todd can be followed throughout the day on Twitter @ToddHultman1
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