DTN Early Word Grains
Crop Prices Lower: There's a New Tariff in Town
December corn was down 3 3/4 cents, November soybeans were down 10 cents, and September Kansas City (HRW) wheat was down 5 cents.
CME Globex Recap:Friday's new tariffs from the U.S. and China happened as expected, with more on the way in two weeks. On Monday morning, investors look less concerned as global stock markets are trading higher, especially in Asia. The U.S. dollar index is a little lower and commodities are mixed, but ag commodities are nearly all lower.
OUTSIDE MARKETS:Previous closes on Friday showed the Dow Jones Industrial Average up 99.74 points at 24,456.48 and the S&P 500 up 23.21 points at 2,759.82 while the 10-year Treasury yield ended at 2.83%. Early Monday, DJIA futures were up 105 points. Asian markets are higher with Japan's Nikkei 225 up 264.04 points (1.1%) and China's Shanghai Composite up 67.88 (2.5%). European markets are higher with London's FTSE 100 up 24.24 points (0.3%), Germany's DAX up 24.90 points (0.2%), and France's CAC 40 up 32.34 points (0.6%). The euro was up 0.0021 and the U.S. dollar index was down 0.12 at 93.84. September 30-year T-Bonds were down 9/32nds while August gold was up $8.10 at $1,263.90 and August crude oil was down $0.13 at $73.67. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were up 0.1%.
| BULL | BEAR | ||
| 1) | December corn survived last week's brief penetration of the $3.60 low. | 1) | USDA's good-to-excellent crop ratings remain 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. Next update comes Monday afternoon. | 2) | China's 25% soybean tariff went into effect early Friday and no trade resolution is in sight yet. |
| 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. |
CORN December corn is down 3 3/4 cents early Monday, pulling back from Friday's unexpected short-covering rally. There was not much rain across the Corn Belt over the weekend and the best chances this week appear to be moderate amounts over the north-central Corn Belt. With corn now hitting pollination time, temperatures are expected to be in the low to mid-90s in the western half of the Corn Belt and more moderate in the eastern half. Overall, no serious threats are seen yet to this year's corn crop and USDA will release a new set of monthly estimates on Thursday, July 12. Technically, the trend in corn is still down and USDA's corn crop rating remains high. 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 November soybeans are trading down 10 cents early Monday, quickly giving back a chunk of Friday's 38 3/4 cent gain with no significant bullish argument for soybeans at the moment. Friday's higher trade was likely a one-day event that caught some of the shorts in soybeans off guard. Looking ahead, it is difficult to see much bullish potential for soybeans unless the weather turns hotter and drier the next two months. This week's weather will be drier and temperatures will be hotter in the western Midwest, but more moderate in the central and eastern Midwest where crops are likely to do well. Also, there was certainly nothing bullish about Friday's new 25% tariff from China and that continues to keep investors cautious in soybeans. So far, another big soybean harvest looks possible this fall and the trend in soybeans remains down.
WHEAT September K.C. wheat is down 5 cents early, as moderation seems to be the theme of Monday morning's trading. Just as winter wheat looked ready to extend its downtrends, last week's prices got a lift from reduced crop estimates in Europe as Germany's weather has been dry and the western Canadian Prairie is also a concern. Before last week, southern Russia was the main concern along with parts of Australia so the list of troubled areas grew a little longer, but it still appears that world wheat production should do well overall. USDA will put out its next monthly WASDE report on Thursday, July 12 and a 3% reduction from last year's record production seems likely. For now, weather remains the key risk of 2018 and the trends for all three wheats remain down. There is still 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: | $3.27 | $0.08 | -$0.33 | Sep | $0.001 |
| Soybeans: | $8.17 | $0.38 | -$0.60 | Aug | -$0.001 |
| SRW Wheat: | $4.89 | $0.09 | -$0.26 | Sep | -$0.006 |
| HRW Wheat: | $4.90 | $0.10 | -$0.23 | Sep | $0.004 |
| HRS Wheat: | $5.33 | $0.11 | -$0.25 | Sep | -$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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