DTN Early Word Grains

6:00 a.m. CME Globex:

December corn was down 1/2 cent, November soybeans were up 3/4 cent, and September Kansas City (HRW) wheat was down 1 cent.

CME Globex Recap:

As expected, new tariffs of $34 billion from each, the U.S. and China, went into effect early Friday and the overall market response has been mild, even as the U.S. threatens to impose more. Major global stock markets are mostly higher while Dow Jones' futures are a little lower. Commodities are steady to lower and November soybeans, the target of a new 25% tariff, is a little higher.

OUTSIDE MARKETS:

Previous closes on Thursday showed the Dow Jones Industrial Average up 181.92 points at 24,356.74 and the S&P 500 up 23.39 points at 2,713.22 while the 10-year Treasury yield ended at 2.84%. Early Friday, DJIA futures were down 33 points. Asian markets are higher with Japan's Nikkei 225 up 241.15 points (1.1%) and China's Shanghai Composite up 13.35 (0.5%). European markets are mostly higher with London's FTSE 100 down 2.58 points (-0.03%), Germany's DAX up 20.09 points (0.2%), and France's CAC 40 up 13.31 points (0.2%). The euro was up 0.0025 and the U.S. dollar index was down 0.07 at 94.33. September 30-year T-Bonds were up 1/32nd while August gold was down $3.50 at $1,255.30 and August crude oil was down $0.16 at $72.78. Soybeans on China's Dalian Exchange were mostly steady and Malaysian palm oil futures were down 0.5%.

	BULL		BEAR
1)	USDA's lower estimate of world ending corn stocks remains the best argument for corn prices finding support.	1)	USDA's good-to-excellent crop ratings are still high for row crops and spring wheat.
2)	Commercials turned net long in soybeans as of June 26, a recognition of value at these lower prices.	2)	U.S. and Chinese tariffs went into effect early Friday, including China's 25% tariff against U.S. soybeans. The U.S. is threatening to impose more.
3)	Recent dry weather concerns in Europe remind us weather risk is still in play for wheat in 2018.	3)	Downtrends remain in effect for corn, soybeans, and all three wheats with potential buyers difficult to entice.

MORE COMMODITY-SPECIFIC COMMENTS

CORN December corn is down 1/2 cent early Friday, staying within a narrow trading range so far and not showing much impact from Friday's tariff news. As mentioned before, corn is not directly impacted as China does not import much corn, but corn prices often suffer indirectly when investors head to the sidelines. Here in the U.S., Friday morning's weather map is mostly dry for the Corn Belt with above normal temperatures expected the next seven days. However, the temperatures are not expected to be hot enough to inflict serious yield damage and will be helpful to areas suffering from excess rain. So far, the corn crop appears to be doing well overall as we head into the pollination stage. Technically, the trend in corn is still down and noncommercial net longs remain a bearish concern. USDA's outlook for lower world corn supplies in 2018-19 remains the one factor that should help prices find support above last year's lows.

SOYBEANS The tariff deadline arrived early Friday, U.S. tariffs went into effect, as expected, and investors are so rattled that November soybeans are trading up 3/4 cent. Obviously, there is something to be said for anticipation as the same November soybeans had already dropped over $2.00 a bushel from their high in late May. Friday's subdued reaction doesn't necessarily mean that soybeans can't go lower as the U.S. is threatening to impose more tariffs against China. But it is fair to wonder if the bulk of the bearish damage has been done as far as the trade war is concerned. The other bearish risk for soybeans, of course, is that the U.S. will have another big fall harvest and so far, that is looking probable. The seven-day forecast is looking drier across the Midwest with warmer, but not extremely hot temperatures. USDA will give its next crop estimate on July 12, but the August estimate, based on field observations is the one that prices will be bracing for. So far, the trend in soybeans remains down.

WHEAT September K.C. wheat is down 1 cent early Friday, but still threatening to post a modestly higher close for the week, thanks to concerns of dry weather in Europe. The worst wheat spots in 2018 likely belong to the southwestern U.S. Plains and southern Russia, possibly including parts of Australia. After those, additional areas of lesser concern include western Canada, France, Germany, and Siberia's spring wheat region. USDA will have its next estimate of world wheat production for us next Thursday, July 12 and I suspect its estimate will drop, from a 2% reduction to a 3% reduction from a year ago. If true, that will take some of the extreme bearish edge off world wheat supplies, but they are still a long way from anything we would describe as "tight." What does seem to be tight is short-term demand for July Chicago wheat as only 398 contracts are left in open interest as commercials have bid the price up, almost to the September price level. Otherwise, the overall outlook for wheat prices remains bearish and the trends for all three wheats remain down. There is enough uncertainty in 2018 to encourage two-way trading in winter wheat.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.19	$0.00	-$0.33	Sep	$0.001
Soybeans:	$7.79	-$0.08	-$0.60	Aug	$0.007
SRW Wheat:	$4.80	$0.15	-$0.26	Sep	$0.001
HRW Wheat:	$4.80	$0.19	-$0.23	Sep	-$0.001
HRS Wheat:	$5.23	$0.11	-$0.25	Sep	-$0.012

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

Todd can be followed throughout the day on Twitter @ToddHultman1

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