DTN Early Word Grains

Soybeans Higher, Headed to Europe

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

December corn was up 4 3/4 cents, November soybeans were up 16 3/4 cents, and September Kansas City (HRW) wheat was up 7 1/2 cents.

CME Globex Recap:

Germany's stock market is higher early Thursday after the U.S. and European officials agreed to work on dismantling steel and aluminum tariffs enacted by the U.S. earlier this year. Soybean prices are the other winner early Thursday after Europe agreed to import more U.S. soybeans and liquid natural gas.

OUTSIDE MARKETS:

Previous closes on Wednesday showed the Dow Jones Industrial Average up 172.16 points at 25,414.10 and the S&P 500 up 25.67 points at 2,846.07 while the 10-year Treasury yield ended at 2.94%. Early Thursday, DJIA futures were up 30 points. Asian markets are lower with Japan's Nikkei 225 down 27.38 (-0.1%) and China's Shanghai Composite down 21.42 (-0.7%). European markets are mostly higher with London's FTSE 100 down 4.97 points (-0.1%), Germany's DAX up 180.29 points (1.4%), and France's CAC 40 up 42.39 points (0.8%). The euro was up .0008 and the U.S. dollar index was up 0.06 at 94.29. September 30-year T-Bonds were down 18/32nds while August gold was down $4.80 at $1,227.00 and September crude oil was down $0.05 at $69.25. Soybeans on China's Dalian Exchange were steady to higher and Malaysian palm oil futures were up 1.6%.

BULL BEAR
1) Dry conditions in the southwestern Corn Belt plus Michigan are helping support row crop prices. 1) USDA's good-to-excellent crop ratings for row crops are among the higher ratings of the past five years.
2) European officials agree to import more soybeans after Wednesday's White House meeting. The amount is not yet specified. 2) China's 25% tariff on U.S. soybeans.
3) Surging prices of milling wheat in Europe, related to dry weather have turned U.S. wheat prices higher. 3) Friday's report of U.S. GDP is expected to show higher growth in the second quarter, supporting the case for more rate hikes and a higher U.S. dollar.

MORE COMMODITY-SPECIFIC COMMENTS

CORN December corn is up 4 3/4 cents early, receiving bullish influence from December milling wheat trading up 1.1% in Europe and from soybeans getting a European promise to import more after Wednesday's White House meeting. Thursday morning's weather map has light to moderate showers scattered about the southwestern Plains, but it seems that this week's rains are going to be less than earlier advertised with a fairly dry five-day forecast also ahead. Helping crops at this time, temperatures are moderate around most of the Corn Belt and will even be on the cool side Friday into this weekend. The trend in December corn remains down, but we see prices challenging their five-week highs at $3.80. However, the July low near $3.50 is a good candidate for support as USDA is expecting lower world corn supplies in 2018-19 and wheat is now offering corn more support.

SOYBEANS November soybeans are up 16 3/4 cents early, celebrating news from Wednesday's White House that Europe will be importing more U.S. soybeans. The specifics of Wednesday's talks are not yet known, but the impression is that the U.S. will back down from new car tariffs and work with Europe to dismantle the steel and aluminum tariffs the U.S. enacted earlier this year. Increased imports of soybeans and liquid natural gas from the U.S. were apparently part of the deal, but amounts were not announced. The news was enough to trigger some noncommercial short-covering, adding to the counter-trend rally that we have seen in soybeans since Friday the 13th. Europe's news may also help counter any disappointment seen later Thursday in the weekly report of export sales, but in terms of buying potential, Europe is no China. For now, November soybeans are trading up from their lows, but the trend remains down with the seasonal low not due until early October.

WHEAT September K.C. wheat is up 7 1/2 cents early, helped by a 1% gain in the price of Europe's December milling wheat as dry weather concerns in Europe are the latest bullish influence for prices. Another bit of bullish news came from the Wheat Quality Council's Spring Wheat tour on Wednesday as comments from scouts did not match the high expectations of USDA's 79% good-to-excellent crop rating (see "Spring Wheat Tour - Day 2" by DTN's Emily Unglesbee). The official yield of day two was 41.1 bushels an acre, up from 35.7 bushels a year ago, but fields varied widely with both, good and stressed crops seen. As we head to late July, we see a world wheat crop that is doing well overall, but continues to encounter challenges of adverse weather. The International Grains Council will draw some interest when it release its next estimates in early August. The trends for all three wheats are currently up with weather concerns still active.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.30 $0.07 -$0.29 Sep -$0.006
Soybeans: $7.99 $0.02 -$0.61 Aug -$0.012
SRW Wheat: $5.15 $0.32 -$0.27 Sep -$0.007
HRW Wheat: $5.24 $0.30 -$0.17 Sep -$0.007
HRS Wheat: $5.51 $0.29 -$0.37 Sep -$0.038

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

Todd can be followed throughout the day on Twitter @ToddHultman1

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Todd Hultman