DTN Closing Grain Comments

General Comments:

July corn closed up 6 cents per bushel and December corn was up 5 1/4 cents. July soybeans closed down 2 1/4 cents and November soybeans were down 1 3/4 cents. July Kansas City wheat closed up 6 cents, July Chicago wheat was up 7 1/4 cents and July Minneapolis wheat was up 5 cents.

The June U.S. dollar index is trading down 0.271 at 96.930. The Dow Jones Industrial Average is up 24.70 points at 26,617.61. June gold is up $1.30 at $1,287.00, July silver is down $0.20 at $14.78 and July copper is down $0.0930 at $2.8110. June crude oil is down $0.49 at $63.42, June heating oil is up $0.0067, June RBOB is down $0.0128 and June natural gas is up $0.043.

Corn:

July corn pushed 6 cents higher to $3.68 1/2 Wednesday on steady volume, reflecting uncertainty about planting conditions in 2019. Wednesday's weather map showed heavy rain in Arkansas, moderate showers around the Great Lakes and snow in the Dakotas. Four inch midday soil temperatures are in the 40s in Iowa and Minnesota, still in the 30s in parts of the Dakotas and Wisconsin. The seven-day forecast is wet for most of the Corn Belt with heavy amounts from eastern Texas to Indiana. Flooding is a concern from Oklahoma to Illinois. Beyond the seven-day, extended forecasts are still wet with below normal temperatures expected in the northern states. At this point, it is difficult to imagine significant planting progress the next two weeks, but so far, futures funds holding record short positions in corn show no sign of changing their minds. Earlier Wednesday, the Department of Energy said last week's ethanol production slipped from 1.048 million barrels to 1.024 million barrels per day, still a good pace. Ethanol inventory was unchanged at 22.7 million barrels. The fundamental outlook for corn prices is neutral if planting goes well and 2019 yields are slightly above trend, but at this moment, that is inconclusive. Technically, July corn prices are near their lowest level in nearly 10 months and the weekly stochastic is still bearish, but deserves close watching. Cash corn prices are roughly steady and will be back above their one-year average Wednesday evening. There were 869 deliveries of May corn late Tuesday. DTN's National Corn Index closed at $3.35 Tuesday, priced 27 cents below the July contract and up from its lowest prices in four months. In outside markets, the June U.S. dollar index is down 0.27 after the Federal Reserve kept its federal funds target unchanged at 2.25% to 2.50%, as expected. The Federal Reserve said inflation measures "remained low in recent months..."

Soybeans:

Noncommercial selling continues largely unopposed in soybeans as the July contract dropped another 2 1/4 cents Wednesday, reaching a new contract low of $8.51 3/4. Prices were down over 9 cents at one point, but rallied back near the close with helpful influence from corn and wheat. The 2018 spot low of $8.26 represents the lowest point July soybeans have seen since 2008 and is at risk of being overcome like the flood barrier in Davenport, Iowa. That is not meant to sound frivolous as U.S. ending soybean stocks are on track for close to 1 billion bushels if the current trade talks with China don't produce any substantial agreement. As described above, the next three weeks are a critical time for corn planting, and the outcome will have ramifications for new-crop soybeans that are currently difficult to predict. So far in 2019, the colder and wetter weather has not been favorable for new-crop expectations, and Wednesday's forecast expects more of the same. Even so, there is a long season ahead with much yet to learn. Wednesday's report from Dow Jones said negotiators still have a lot of work to do next week when U.S.-China trade talks come to Washington D.C. Until a solid deal is announced, traders have learned to ignore the news, and that is contributing to the recent bearish pressure on soybean prices. Fundamentally, there is no good bullish argument for U.S. soybean prices without a trade agreement. Even with an agreement, it is going to take time to bring down the U.S. soybean surplus. Technically, the speculative crowd continues to bet on lower prices, extending the trend lower. May deliveries on late Tuesday totaled 451 for soybeans, 195 for meal and 477 for soybean oil. DTN's National Soybean Index closed at $7.65 Tuesday, priced 89 cents below the July contract and at its lowest price in five months.

Wheat:

July KC wheat gained back 6 cents to $4.00 Wednesday, a decent bounce after falling to another new contract low on Tuesday. Day 1 of the Wheat Quality Council's HRW Wheat Tour turned in their worksheets Tuesday evening and came up with an average yield estimate of 47 bushels an acre, up from 38 bushels a year ago. Lack of drought seemed to be the most prominent feature, followed by the lack of wheat acres. Kansas plantings fell to 7 million in 2019, the lowest since 1910, DTN Staff Reporter Emily Unglesbee reported from the tour. Unglesbee also noted that nearly half of the wheat was planted late due to wet weather in October. Wednesday's modest gain in price came as heavy rain fell on Arkansas and more is expected in the Southern Plains and eastern Midwest the next seven days. With USDA estimating 64% of all U.S. winter wheat rated either good or excellent and conditions looking mostly favorable in Europe, Ukraine and Russia, bearish pressure continues to keep cash winter wheat prices near their lowest levels in over a year. Technically, spot KC wheat is near its lowest prices in 13 years, a historically cheap price that is encountering no fundamental argument yet. Late Tuesday, May deliveries totaled 826 for Chicago wheat and none again for KC wheat. DTN's National HRW index closed at $3.77 Tuesday, its lowest in over a year and 17 cents below the July contract. DTN's National SRW index closed at $4.02, trading not far above its March low.

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

FollowTodd on Twitter @ToddHultman1

(CZ)

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