DTN Early Word Grains
More Tariff Talk Brings Risk-Off Response
December corn was down 4 1/4 cents, November soybeans were down 15 3/4 cents, and September Kansas City (HRW) wheat was down 7 3/4 cents.
CME Globex Recap:Investors were back on their heels again early Wednesday, raising cash after President Trump issued a list of $200 billion of Chinese goods that could get hit with 10% tariffs. Global stock markets and most commodities, including grains were all starting lower early Wednesday.
OUTSIDE MARKETS:Previous closes on Tuesday showed the Dow Jones Industrial Average up 143.07 points at 24,919.66 and the S&P 500 up 9.67 points at 2,793.84 while the 10-year Treasury yield ended at 2.87%. Early Wednesday, DJIA futures were down 194 points. Asian markets are lower with Japan's Nikkei 225 down 264.68 points (-1.2%) and China's Shanghai Composite down 49.85 (-1.8%). European markets are also lower with London's FTSE 100 down 104.49 points (-1.3%), Germany's DAX down 169.81 points (-1.3%), and France's CAC 40 down 64.96 points (-1.2%). The euro was down 0.0043 and the U.S. dollar index was up 0.26 at 94.42. September 30-year T-Bonds were up 21/32nds while August gold was down $5.20 at $1,250.20 and August crude oil was down $0.56 at $73.55. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were down 2.4%.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | Let's face it, bullish factors for grains are difficult to find these days. | 1) | USDA's good-to-excellent crop ratings remain high for row crops and spring wheat. |
| 2) | CFTC data shows commercials added to net long positions in soybeans and spring wheat as of July 3. | 2) | China's 25% soybean tariff is now in effect and every new tariff proposal pushes investors farther away. |
| 3) | Thursday's WASDE report should show a modest reduction in the estimate of world wheat production. | 3) | Downtrends remain in effect for corn, soybeans, and all three wheats with potential buyers difficult to entice. |
CORN December corn is down 4 1/4 cents early, trading at a new contract low as prices take another indirect hit from talk of more U.S. tariffs against China. We continue to remind that China doesn't buy enough corn from the U.S. to make corn prices vulnerable to tariffs, but prices do suffer generally when investors go on the defensive and raise cash. The bigger problem for corn prices continues to be that crops are doing well as pollination progresses. Wednesday's temperatures will be hot in the western Corn Belt, tough on crops in Kansas and Missouri where conditions are drier, but possibly helpful to flooded areas in the northwestern Corn Belt where more rain is expected to return the next five days. With crops doing well in most areas and corn demand running slower than expected, Thursday's WASDE report is apt to show a higher estimate of U.S. ending corn stocks for 2018-19. Technically, the trend in corn remains 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 down 15 3/4 cents early Wednesday, back near their lowest November prices in over two years after President Trump threatened China with a $200 billion list of proposed 10% tariffs. Investors are pulling back from stock and commodity markets early Wednesday and soybean traders continue to wonder how long China will be able to stay away from buying U.S. soybeans. So far, there is nothing hopeful in view for soybean bulls, either on the trade front or as far as crop conditions go. Wednesday's hot temperatures will add stress to soybeans in Missouri, but conditions elsewhere remain generally favorable with broad rain coverage expected the next seven days. Dow Jones' survey of analysts is expecting U.S. ending soybean stocks to increase from 385 to 491 million bushels in Thursday's WASDE report. The yield estimate could get bumped higher, thanks to good weather and USDA is likely to reduce its estimate of new-crop demand in response to the July 6 soybean tariff. For now, the trend in soybeans remains down.
WHEAT September K.C. wheat is down 7 3/4 cents early, caught in Wednesday's broad sell-off of commodities and not finding much bullish hope of its own. Thursday's WASDE report probably won't offer much change to USDA's estimate of U.S. ending wheat supplies, but updated crop estimates for Europe and Russia will be interesting to see and it is possible that a larger-than-expected crop reduction could show up. The problem for world wheat of course, is thanks to last season's record ending supplies, there is plenty of margin for wheat to suffer some production loss in 2018-19 and still end the season with plentiful amounts. Here in the U.S., winter wheat harvest should make progress Wednesday under hot and dry conditions. Spring wheat crops are expecting rain in most areas, including the Canadian Prairie, but weather will be drier from North Dakota to the Pacific Northwest. For now, weather is still a risk in 2018, but the trends for all three wheats are down.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.16 | -$0.06 | -$0.32 | Sep | $0.001 |
| Soybeans: | $7.96 | $0.00 | -$0.60 | Aug | $0.003 |
| SRW Wheat: | $4.67 | -$0.16 | -$0.25 | Sep | $0.001 |
| HRW Wheat: | $4.73 | -$0.11 | -$0.21 | Sep | $0.003 |
| HRS Wheat: | $5.13 | -$0.12 | -$0.24 | Sep | -$0.018 |
Todd Hultman can be reached at todd.hultman@dtn.com
Todd can be followed throughout the day on Twitter @ToddHultman1
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