DTN Closing Grain Comments

Row Crops Start to Acknowledge Problem

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

May corn closed up 4 3/4 cents per bushel and December corn was up 3 1/4 cents. May soybeans closed up 4 1/2 cents and November soybeans were up 4 1/2 cents. May Kansas City wheat closed up 3 cents, May Chicago wheat was up 1 3/4 cents and May Minneapolis wheat was down 1/4 cent.

The June U.S. dollar index is trading up 0.834 at 96.035. The Dow Jones Industrial Average is up 225.00 points at 25,970.67. April gold is up $6.10 at $1,307.80, May silver is up $0.15 at $15.47 and May copper is down $0.0115 at $2.9095. May crude oil is down $0.01 at $60.22, May heating oil is down $0.0121, May RBOB is up $0.0075 and April natural gas is down $0.004.

Corn:

May corn closed up 4 3/4 cents at $3.76 1/4 Thursday in what was likely a slow response of starting to recognize the impact of March flooding on corn planting and corn supplies. Noncommercial short-covering probably also played a part in Thursday's trading as managed futures funds held a record net-short position of 282,981 contracts on March 12. One thing that is clear is that corn prices were not higher due to Thursday's export sales report. 30.1 million bushels (mb) of corn shipments were below the 53 mb needed to reach USDA's export estimate this season. 33.7 million bushels (mb) of new sales put total export commitments down 7% from a year ago. Even if the U.S. were getting more export business, it would be difficult to execute much, given all the transportation problems currently encountered on the nation's waterways. FOB corn prices in New Orleans are currently 81 cents above the futures board, related to the difficulty getting grain to the Gulf. Fundamentally, the outlook for corn prices is neutral. Technically, the trend in cash corn is sideways with some support from commercial net-longs. DTN's National Corn Index closed at $3.44 Wednesday, priced 28 cents below the May contract and up from its lowest price in over three months. In outside markets, the June U.S. dollar index reversed Wednesday's post-Fed announcement loss and is trading up 0.83. Non-ag commodities are mixed and July hogs finished up their 4.50 cent limit at $97.57.

Soybeans: May soybeans were up 4 1/2 cents at $9.10 1/2 Thursday, another quiet day of trading on light volume while trade talks remain ongoing between the U.S. and China. On Wednesday, Dow Jones reported U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer are headed to China next week, presumably to push for an agreement, while the waiting game continues among traders. Early Thursday, USDA said 37.3 mb of soybeans were shipped last week, on pace for USDA's current export estimate of 1.875 billion bushels (bb). 33.7 million bushels of sales however, put total export commitments down 17% from a year ago with less than six months remaining. Fundamentally, so much is riding on the outcome of trade talks with China that everything else comes in a distant second. One of the secondary candidates is the impact of African swine fever on world soybean demand. So far, both soybean and meal prices are holding sideways with support from commercial net longs. DTN's National Soybean Index closed at $8.19 Wednesday, priced 87 cents below the May contract.

Wheat:

May K.C. wheat closed up 3 cents Thursday at $4.47, a quiet day of trading that stretched higher near the close. The month of February took winter wheat prices to lower levels as U.S. wheat exports proved disappointing, but prices appear to have found support near one-year lows in early March with plenty of uncertainty about the new season ahead. Early Thursday, USDA said U.S. wheat shipments totaled 13.1 mb last week, not enough to keep pace with USDA's export estimate. Export sales of 11.0 mb kept total export commitments up 3% from a year ago, but it still looks likely that 2018-19 will end with over one billion bushels of U.S. wheat to carry into 2019-20. Fundamentally, the early outlook for wheat prices is bearish with most wheat crop areas reporting early favorable conditions. Dry conditions in Australia and parts of the Canadian Prairie are exceptions. There is also a chance that corn's flooding concerns could influence wheat prices higher. With U.S. wheat supplies plentiful and HRW wheat exports sluggish, the trends in cash HRW and SRW wheat remain down, while the trend in cash HRS wheat is challenging the upper end of its sideways range. DTN's National HRW index closed at $4.28 Wednesday, 16 cents under the May contract and up from its lowest prices in a year. DTN's National SRW index closed at $4.39, also up from its lowest prices in a year.

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

Follow him on Twitter @ToddHultman

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Todd Hultman