DTN Closing Grain Comments

Corn Holds Modest Gain; Other Grains Sag

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

General Comments:

July corn closed up 4 cents per bushel and December corn was up 3 1/2 cents. July soybeans closed down 5 3/4 cents and November soybeans were down 5 1/2 cents. July KC wheat closed down 4 cents, July Chicago wheat was up 1 cent and July Minneapolis wheat was down 2 cents. The June U.S. dollar index is down 0.224 at 97.695. The Dow Jones Industrial Average is up 19.22 points at 26,481.30. June gold is up $9.00 at $1,288.70, May silver is up $0.13 at $15.01 and May copper is up $0.0260 at $2.8875. June crude oil is down $2.32 at $62.89, June heating oil is down $0.0582, June RBOB is down $0.0470 and June natural gas is up $0.046.

For the week:

July corn closed down 6 cents and December 2019 corn was down 5 1/2 cents. July soybeans were down 27 1/4 cents while November 2019 soybeans were down 25 3/4 cents. July Kansas City wheat was down 18 1/4 cents, July Chicago wheat was down 5 3/4 cents, and July Minneapolis wheat was down 17 3/4 cents.

Corn:

July corn closed up 4 cents Friday at $3.61 1/4, showing a bullish response to more rain in the forecast as we get closer to May. Heavy rain amounts are expected to cover much of the already wet eastern Midwest and southeastern Plains the next seven days, bringing a halt to planting for the bulk of the Corn Belt. The northern Midwest will have more moderate rain amounts, but temperatures also will be below normal much of the next ten days. There is still time for planting to occur, but the window is narrowing for corn. On the demand side, corn shipments have been meeting their expected pace lately, but sales have been slow with no daily announcements from USDA this week. Fundamentally speaking, even if USDA's estimated 92.8 million acres of corn gets planted, U.S. ending corn stocks are not expected to change much in 2019-20, so the price outlook is roughly neutral. Upside potential for prices still exists should any production problem arise, especially with noncommercials holding a record amount of net shorts. Technically, cash corn prices dipped to a new low this week, but downside risk should be limited. DTN's National Corn Index closed at $3.28 Thursday, 19 cents below the May contract and down from its February high of $3.52. In outside markets, the June U.S. dollar index is trading down 0.22, even after the U.S. Commerce Department said real GDP was up 3.2% in the first quarter from a year ago, more than expected. Other commodities were mixed Friday with June crude oil down $2.32 a barrel.

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Soybeans:

July soybeans dropped 5 3/4 cents to $8.67 Friday, capping off the week with a 27 1/4 cent loss. July prices are now back to their lowest level in seven months, pressured by several bearish concerns, starting with the anticipation of record ending soybean stocks in 2018-19. U.S. officials are expected to travel to Beijing next week to keep trade talks going, but it remains to be seen if anything concrete will come out of it. Without some kind of breakthrough with China, it is difficult to imagine a bullish scenario for soybean prices, apart from a surprise of adverse weather. For the record, adverse weather is possible, but not currently anticipated. July soybean meal did well to hold support and close higher Thursday, but came tumbling back down Friday. July meal fell $5.90 to $303.70, now sitting on three-year support. The Buenos Aires Grain Exchange said late Thursday that 51% of Argentina's soybean harvest is complete, good progress for this year's larger crop. Fundamentally, the outlook for soybean prices remains heavily bearish, understanding that a trade agreement or unexpected weather could change perspectives as we move into May. Technically, the trend in cash soybeans remains down. DTN's National Soybean Index closed at $7.80 Thursday, near its lowest prices in five months and $0.80 below the May futures contract.

Wheat:

July KC wheat ended down 4 cents, limping to a new contract low of $4.07 1/2 Friday. For the week, prices were down 18 1/4 cents, pressured by ongoing disappointment with U.S. exports and mostly favorable early weather conditions for the U.S. and world wheat crops. Here in the U.S., the seven-day forecast is expecting heavy rain for almost all but the most western areas of the U.S. winter wheat crop. The SRW wheat region in particular is already too wet and it is fair to wonder if USDA's high 62% good-to-excellent rating will be able to survive the season to harvest. These concerns, however, are not enough to offset the bearishness of a 1.1 billion bushel carry out as we head into the new 2019-20 season on June 1. Adverse weather can change perspectives on wheat prices, but so far concerns are minor among the world's wheat regions and the 2019 world crop could come close to the 2017 record of 763.2 mmt (28.04 bb). Technically, the trends for all three cash wheat prices remain down. With commercials net long in all three wheats and spot KC wheat prices dipping below their 2017 low, support should not be far away. DTN's National HRW Index closed at $3.93 Thursday, down 11 cents from the May futures contract and at its lowest price in over a year. DTN's National SRW Index closed at $4.12 Thursday, near its lowest prices in a year.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

(CZ)

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Todd Hultman