DTN Early Word Grains
Early Monday Finds Grains Still Under Pressure
December corn was down 1 1/4 cents, November soybeans were down 4 1/4 cents, and September Kansas City (HRW) wheat was down 4 1/2 cents.
CME Globex Recap:European stock markets are mixed and China's stock market is a little lower after China's GDP was up 6.7% in the second quarter from a year ago, slightly lower than first quarter growth, reported CNBC.com. The September U.S. dollar index is a little lower and outside commodities are mixed, but the grain sector is mostly lower with more moderate temperatures expected across the Midwest this week.
OUTSIDE MARKETS:Previous closes on Friday showed the Dow Jones Industrial Average up 94.52 points at 25,019.41 and the S&P 500 up 3.02 points at 2,801.31 while the 10-year Treasury yield ended at 2.83%. Early Friday, DJIA futures were up 13 points. Asian markets are lower with Japan's Nikkei 225 on holiday and China's Shanghai Composite down 17.14 (-0.6%). European markets are mixed with London's FTSE 100 down 1.67 points (-0.02%), Germany's DAX up 30.60 points (0.2%), and France's CAC 40 up 0.93 points (0.02%). The euro was up .0026 and the U.S. dollar index was down 0.12 at 94.56. September 30-year T-Bonds were down 4/32nds while August gold was up $3.10 at $1,244.30 and August crude oil was down $0.93 at $70.08. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were up 1.0%.
| BULL | BEAR | ||
| 1) | USDA's July WASDE report provided lower-than-expected ending world stocks of corn and wheat. | 1) | USDA's good-to-excellent crop ratings remain high for row crops and spring wheat. |
| 2) | Commercials are net long soybeans, soybean oil, and Minneapolis wheat -- three commodities that are starting to look cheap. | 2) | Last Tuesday's U.S. proposal for $200 billion of tariffs against China is the latest move keeping investors skittish in the markets. |
| 3) | Chicago wheat bounced back from Wednesday's new five-month low with USDA's help. | 3) | Downtrends remain in effect for corn, soybeans, and all three wheats with potential buyers difficult to entice. |
CORN December corn is down 1 1/4 cents early Monday, coming off of a mostly dry weekend performance in the Corn Belt with hot temperatures on the western side. This week's temperatures are expected to be more moderate for all, but the southwestern Corn Belt. The western Corn Belt is expecting moderate rain amounts the next few days, followed by a few days of the same in the eastern Corn Belt. USDA's Crop Progress report could show slightly lower crop ratings for corn and soybeans Monday afternoon, but will still be higher overall, suggesting another big harvest this fall. Friday's CFTC data showed noncommercials still stubbornly bullish and reluctantly cutting net longs, from 148,352 to 109,320 as of July 10. Technically, the trend in corn remains down and the U.S. corn crop appears to be doing well. 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 4 1/4 cents early, still under pressure after breaking to the lowest November prices in over nine years last week. As described for corn above, USDA's crop ratings for soybeans may come down a little Monday afternoon, but are still likely to be high for this time of year with a favorable looking forecast for the week ahead. Missouri has been a troubled spot this year and could get in on some rain the next few days, but will also stay hotter than the rest of the Corn Belt this week. Friday's CFTC data showed noncommercials turned back to slightly net long in soybeans on July 10, suckered by last Friday's one-day short-covering rally before prices returned to new lows. Commercials took advantage of the brief rally to reduce net longs from 34,663 to 22,577. Monday's crush report from the National Oilseeds Processors Association should show another high crush number for June as the incentives remain high in 2018, but soybean prices will need more than that to turn the trend around. The trend in soybeans remains down, but we also see commercials net long at these cheaper prices -- the lowest November soybean prices in nine years.
WHEAT September K.C. wheat is down 4 1/2 cents early, still holding above its 2018 low, but not finding a strong enough argument to sustain a price rally. Dry weather has reduced wheat prospects in Australia, Europe, and southern Russia to the point where USDA's world wheat crop estimate is now down 3% from a year ago, but the estimate of global ending stocks is still historically high at 35% of annual use. September Minneapolis wheat is down 3 1/2 cents early, still near its lowest prices in 22 months with the U.S. spring wheat crop looking good and USDA apt to post another high crop rating on Monday afternoon. Friday's CFTC data showed noncommercials bearish, holding 9,412 net shorts as of July 10, while commercials continue to find value at the lower prices, holding 11,979 net longs. For now, the trends remain down for all three wheats.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.10 | -$0.04 | -$0.31 | Sep | $0.007 |
| Soybeans: | $7.58 | -$0.15 | -$0.61 | Aug | -$0.002 |
| SRW Wheat: | $4.71 | $0.12 | -$0.26 | Sep | -$0.009 |
| HRW Wheat: | $4.75 | $0.10 | -$0.17 | Sep | -$0.007 |
| HRS Wheat: | $5.04 | $0.00 | -$0.28 | Sep | -$0.008 |
Todd Hultman can be reached at todd.hultman@dtn.com
Todd can be followed throughout the day on Twitter @ToddHultman1
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