DTN Early Word Grains

Europe Shows End-of-Week Wheat Rally

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

December corn was up 2 1/4 cents, November soybeans were down 3/4 cent, and December K.C. wheat was up 16 1/4 cents.

CME Globex Recap:

European stocks and Dow Jones futures are a little lower early Friday with the Turkish lira also trading lower after Bloomberg news reported the U.S. threatened more sanctions against Turkey. Outside commodities are mixed with crude oil a little higher. Grains are also mixed with K.C. wheat prices attracting early commercial buying.

OUTSIDE MARKETS:

Previous closes on Thursday showed the Dow Jones Industrial Average up 396.32 points at 25,558.73 and the S&P 500 up 22.32 points at 2,840.69 while the 10-year Treasury yield ended at 2.87%. Early Friday, DJIA futures were down 27 points. Asian markets are mixed with Japan's Nikkei 225 up 78.34 (0.3%) and China's Shanghai Composite down 36.23 (-1.3%). European markets are a little lower with London's FTSE 100 down 8.94 points (-0.1%), Germany's DAX down 26.99 points (-0.2%), and France's CAC 40 down 0.43 points (-0.01%). The euro was up .0028 and the U.S. dollar index was down 0.16 at 96.44. September 30-year T-Bonds were up 14/32nds while December gold was up $0.20 at $1,184.20 and September crude oil was up $0.21 at $65.67. Soybeans on China's Dalian Exchange were a little lower and Malaysian palm oil futures were up 1.2%.

BULL BEAR
1) November soybeans are back near $9.00 with trading still volatile in August. 1) USDA estimated a record U.S. soybean crop and record corn yield.
2) IGC and USDA both estimate significant reductions in exportable world ending stocks of corn and wheat in 2018-19. 2) Several outside commodities fell to new lows Wednesday as the rising U.S. dollar and expectations for gradually higher interest rates exert bearish influence.
3) U.S. wheat prices continue to find support from higher prices in Europe. 3) China's 25% soybean tariff is still on. Will a meeting with Chinese officials later in August bring change or more disappointment?

MORE COMMODITY-SPECIFIC COMMENTS

CORN December corn is up 2 1/4 cents early Friday, helped by higher wheat prices, but still facing a seven-day forecast that expects broad rain coverage over the central U.S., east of the Rocky mountains with heavier amounts east of Illinois and south of Missouri. The rain will be accompanied by moderate summer temperatures, which should be helpful to row crops in their later stages of development. USDA's expectation for a large, 14.6 billion bushel crop plus roughly two billion bushels of old-crop corn to start the new season on September 1 should be enough to keep prices under harvest pressure early in the fall before demand starts to have a more supportive influence later in 2018-19. For now, the trend in December corn remains sideways.

SOYBEANS November soybeans are down 3/4 cent early Friday, slightly trimming back Thursday's 28-cent jump on news of Chinese officials coming to Washington D.C. later this month to talk trade. Obviously, there is no sign yet that the two sides are near an agreement, but just the possibility of one is a hopeful step that has not been seen for a while and was enough to chase some shorts out of the market. While traders wait the meeting to happen, this year's U.S. soybean crop appears to be doing well with moderate summer temperatures and more rain in the forecast for the central U.S. as pods are filling. The anticipation of a record U.S. soybean crop in 2018 should be enough to keep prices under pressure into harvest time while demand remains difficult to assess. The trend in November soybeans remains sideways while the future of trade with China continues to be a big wildcard.

WHEAT December K.C. wheat is up 16 1/4 cents Friday in an unusual show of commercial buying this early in the day, which appears related to an end-of-the-week rally in Europe's price of December milling wheat. Europe's prices are still not far away from four-year highs, made earlier this month. Wheat prices continue to benefit from lower global wheat production in 2018 and ongoing dry weather concerns. While it is not clear that wheat supplies will be difficult to obtain in 2018-19, it does seem likely that the U.S. will benefit from increased exports as the other major exporters of wheat experienced better demand last year and are expecting lower supplies. Here in the U.S., drought is still a potential problem for the next winter wheat crop, but this week's forecast for rain across the central U.S. should help. September Minneapolis wheat is up 11 cents early while the forecast for the northwestern U.S. and western Canadian Prairie remains mostly dry with episodes of hot temperatures adding to wildfire risk. For now, the trends for all three U.S. wheats remain up.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.34 $0.04 -$0.31 Sep $0.000
Soybeans: $8.14 $0.27 -$0.83 Nov -$0.010
SRW Wheat: $5.14 $0.09 -$0.28 Sep -$0.008
HRW Wheat: $5.28 $0.12 -$0.20 Sep -$0.002
HRS Wheat: $5.47 $0.12 -$0.49 Sep -$0.004

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