DTN Early Word Grains

Crops Quietly Mixed Ahead of Unemployment Report

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

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

CME Globex Recap:

Asian stock markets are mixed and European markets are modestly higher as investors cautiously come back after Thursday's trade war concerns. Corn and wheat prices are a little higher early Friday, but most outside commodities are lower ahead of a U.S. unemployment report at 7:30 a.m. CDT that will likely strengthen the case for a higher U.S. dollar.

OUTSIDE MARKETS:

Previous closes on Thursday showed the Dow Jones Industrial Average down 7.66 points at 25,326.16 and the S&P 500 up 13.86 points at 2,827.22 while the 10-year Treasury yield ended at 2.99%. Early Friday, DJIA futures were up 7 points. Asian markets are mixed with Japan's Nikkei 225 up 12.65 (0.1%) and China's Shanghai Composite down 27.58 (-1.0%). European markets are modestly higher with London's FTSE 100 up 35.76 points (0.5%), Germany's DAX up 59.75 points (0.5%), and France's CAC 40 up 16.33 points (0.3%). The euro was down .0008 and the U.S. dollar index was up 0.06 at 95.23. September 30-year T-Bonds were up a 4/32nd while December gold was down $4.40 at $1,215.70 and September crude oil was up $0.18 at $69.14. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were down 0.1%.

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BULL BEAR
1)

Drought remains a problem in northern Missouri, the Southern Plains, and the Pacific Northwest.

1)

The Eastern Corn Belt plus Iowa is expecting rain the next seven days.

2)

IGC estimates expect significant reductions in exportable world ending stocks of corn and wheat in 2018-19.

2)

Friday's Labor Department report is expected to show a non-farm payroll increase of 195,000 in July, according to Marketwatch.com -- further support for a higher U.S. dollar.

3)

Milling wheat prices in Europe are unchanged early Friday, near four-year highs and keeping traders anxious about U.S. wheat prices.

3)

Ongoing trade war concerns are keeping investors cautious.

MORE COMMODITY-SPECIFIC COMMENTS

CORN December corn is up 1 3/4 cents early with a mostly dry weather map for the Midwest on Friday morning and hotter temperatures expected later in the day. Nebraska and Iowa are expecting rain this weekend with the Eastern Corn Belt and area around the Great Lakes due for moderate amounts early next week. Temperatures will be above normal the next 10 days with hotter readings found in the Western Corn Belt so crops will be encountering some stress. Fundamentally, the outlook for corn remains roughly neutral, thanks to USDA's estimate of lower world ending corn stocks. Technically, the downtrend in December corn has been broken and prices are searching for a new trading range while traders try to figure out the size of this year's crop.

SOYBEANS November soybeans are down 2 3/4 cents early Friday, pressured by the ongoing trade dispute with China and chances for rain for at least part of the Midwest. Except for northern Missouri and central Illinois, the latest seven-day forecast expects mostly moderate rain amounts for the eastern two-thirds of the Midwest. The western Plains however, will be mostly dry with hot temperatures stressing pod-setting soybeans. As most are aware, forecast amounts don't always turn out as expected so it will be important to keep an eye on actual amounts for soybeans at this critical time. Currently, the market only has weather observations and USDA's crop ratings to make guesses about yield, so the range of guesses is still wide. That should start to change after USDA releases its first field-based yield estimates on Aug. 10. For now, soybeans are plentiful and basis is widely bearish. Technically, the downtrend has been broken, but weather plus trade policy decisions give prices wide potential in either direction.

WHEAT September K.C. wheat is up 1 1/4 cents early, a quieter start to Friday after a volatile performance on Thursday. According to Bloomberg.com, Ukraine's Ag Ministry said on Facebook Thursday that milling wheat exports would be limited, but the Ag Ministry later explained it would be done informally with exporters. Thursday's markets reacted with a surge of heavy buying volume that did not last long and a brief attempt at new highs for 2018 failed. The news should not have been a shock to markets as USDA is only estimating 37 million bushels of ending wheat stocks for Ukraine in 2018-19, but in this environment when dry weather concerns are prevalent and Europe's milling prices are near four-year highs, these kinds of volatile eruptions are liable to happen. With weather risk still active in several locations around the globe, the trends for all three wheats remain up.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.36 $0.01 -$0.31 Sep -$0.009
Soybeans: $8.19 -$0.05 -$0.78 Nov -$0.008
SRW Wheat: $5.35 $0.00 -$0.25 Sep -$0.025
HRW Wheat: $5.51 $0.06 -$0.18 Sep $0.000
HRS Wheat: $5.65 -$0.01 -$0.45 Sep -$0.032

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