DTN Closing Grain Comments

General Comments:

May corn closed steady and December corn was up 1/4 cent. May soybeans closed steady and November soybeans were down 1/2 cent. May KC wheat closed down 4 cents, May Chicago wheat was down 5 3/4 cents and May Minneapolis wheat was down 1 cent.

The June U.S. dollar index is trading down 0.015 at 96.635. The Dow Jones Industrial Average is down 189.41 points at 26,151.61. June gold is up $6.70 at $1,308.60, May silver is down $0.01 at $15.21 and May copper is up $0.0020 at $2.9340. May crude oil is down $0.44 at $63.96, May heating oil is down $0.0130, May RBOB is up $0.0094 and May natural gas is down $0.018.

Corn:

May corn finished unchanged at $3.60 Tuesday, up from a test of its contract low in spite of USDA's higher-than-expected estimates of corn stocks for 2018-19. Tuesday's rain in the northwestern U.S. Plains is expected to transition into heavy blizzard conditions on Wednesday through early Friday and will certainly not help planting efforts in the region. High winds and heavy snow will also present serious dangers for livestock and travel. Part of the push for lower corn prices lately has come from the higher-than-expected March 1 corn stocks total from USDA's March 29 report. That showed up again in Tuesday's WASDE figures as USDA increased its estimate of U.S. corn ending stocks from 1.835 billion bushels (bb) to 2.035 bb in April, amounting to 14% of annual use in 2018-19. USDA increased its estimate of world ending corn stocks from 308.53 million metric tons (mmt) to a higher-than-expected 314.01 mmt (12.36 bb). Higher crop estimates of 96.0 mmt (3.78bb) from Brazil, 47.0 mmt (1.85 bb) from Argentina and 35.8 mmt (1.41 bb) from Ukraine all contributed to the higher corn stocks total. Tuesday's new WASDE numbers were bearish and explain increased competition for U.S. corn exports, but the puzzle as to how U.S. corn planting will go in 2019 remains unsolved. For now, May corn futures continue to trade near their contract low, while cash prices are chopping sideways above $3.30. DTN's National Corn Index closed at $3.36 Monday, priced 24 cents below the May contract and below its 100-day average. In outside markets, the June U.S. dollar index is quiet, trading down 0.02, while other commodities were mostly lower.

Soybeans:

May soybeans finished steady at $8.98 3/4 Tuesday in quiet trade after USDA's new estimates were largely neutral. USDA reduced its estimate of U.S. ending soybean stocks from 900 million bushels (mb) to 895 mb with a slight increase expected in demand for soybean seeds (hint: more soybean acres expected in May, perhaps?). Otherwise, the estimates for crush demand and exports were kept unchanged. USDA slightly increased its estimate of world soybean stocks on Aug. 31 from 107.17 mmt to 107.36 mmt (3.94 bb). Most of the world estimates were unchanged in April, except Brazil's soybean crop was increased from 116.5 mmt to 117.0 mmt (4.30 bb). Fundamentally, record U.S. ending soybean stocks appear to be in the cards for 2018-19. A possible trade agreement with China could still reduce the final number, but I'm not aware of any Vegas point spread on the chances of that happening. For now, trade negotiations continue between the U.S. and China, while both cash and futures soybean prices continue to trade sideways. DTN's National Soybean Index closed at $8.14 Monday, chopping sideways and priced 85 cents below the May contract.

Wheat:

May Kansas City wheat dropped 4 cents Tuesday to $4.27 1/2, not finding much encouragement from USDA's latest supply and demand estimates. USDA increased its estimate of U.S. ending wheat stocks from 1.055 bb to 1.087 bb, a little more than expected. Feed demand was reduced by 10 mb and the export estimate was reduced by 20 mb to 945 mb. USDA increased its estimate of world ending wheat stocks from 270.53 mmt to a higher-than-expected 275.61 mmt (10.13 bb). Roughly 2.2 mmt of the increase came from a revision of a prior year and roughly 3 mmt came from a reduction in USDA's estimate of world wheat demand, neither of which helps make a case for higher wheat prices anytime soon. Late Monday, USDA said 60% of winter wheat was rated good to excellent, the highest in seven years. Kansas appears to be in good shape with 58% of the crop either good or excellent, while poor to very poor ratings are highest in Michigan and Ohio. USDA also said 1% of spring wheat has been planted, with the Pacific Northwest getting the earlier start. Given the blizzard conditions headed for the northwestern U.S. Plains on Wednesday, no planting progress is expected this week. With plenty of U.S. wheat available and early crop conditions looking mostly favorable, the trends in cash HRW, SRW and HRS wheats are down with prices probing for support. DTN's National HRW index closed at $4.18 Friday, 14 cents under the May contract and up from its lowest prices in a year. DTN's National SRW index closed at $4.41, also up from its lowest prices in a year.

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

Follow him on Twitter @ToddHultman1

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