DTN Closing Grain Comments

General Comments:

July corn closed up 5 1/4 cents per bushel and December corn was up 6 cents. July soybeans closed down 9 3/4 cents and November soybeans were down 9 1/4 cents. July KC wheat closed up 1 1/2 cents, July Chicago wheat was up 1/2 cent and July Minneapolis wheat was down 1/4 cent. The June U.S. dollar index is trading up 0.166 at 97.930. The Dow Jones Industrial Average is up 170.68 points at 25,850.58. June gold is down $3.70 at $1,273.60, July silver is down $0.04 at $14.41 and July copper is down $0.0130 at $2.7130. July crude oil is down $0.16 at $63.05, June heating oil is up $0.0021, July RBOB is up $0.0073 and June natural gas is down $0.058.

Corn:

Once again corn was the headliner with the second consecutive gap higher opening on the July corn chart and third overall. Since one week ago, July corn had rallied some 56 cents per bushel, as managed money funds, who just last week were short a record 344,000 contracts, have bought in an estimated 40% to 50% of that short. Monday's crop progress report came in on the high side of trade expectations, but the 49% of planting completed is the lowest on record for mid-May. Key states, such as Illinois, are severely lagging, at 24% compared to a normal pace of 82%. Indiana and Ohio, at 14% and 9%, are well behind the average. Mother nature will give farmers little help in the next two weeks with heavy rains slated to fall in many high-producing corn states, further exacerbating the seeding delay and likely to slash both yield and acreage ideas, and increasing prevented planting enrollment. Whereas last week ideas were that 2 million to 3 million acres could be lost to soybeans or prevented planting, Monday there were much higher prevented planting numbers -- as much as 9 million to 10 million acres rumored. Of course the upper end of that range, if it becomes a reality, would dramatically change the overall bearish U.S. corn supply and demand outlook. The jury is still out, but certainly so far we are making history. As planting is further delayed, or replanting with shorter season varieties occurs, negative yield impacts are sure to escalate. As of Monday there were theoretically 47.3 million of intended acres unplanted with Illinois and Indiana alone accounting for over 13 million acres of that. Corn has reached some stiff resistance areas and charts are terribly overbought, so a setback is possible. But the funds remain short a formidable amount with the largest natural seller (farmers) too busy or leery to sell much. DTN National Corn Index closed at $3.58 Friday, 25 cents below the July contract.

Soybeans:

Soybeans overnight Monday and early Tuesday morning began to participate in the rally with both July and November moving above their respective 20-day moving averages for the first time since mid-April. However, a midday tweet with rumors of a new aid package for producers amounting to $2.00 per bushel for soybeans (unconfirmed) sent the market sharply lower and to a disappointing lower close. Funds, who had been short a record 171,000 contracts as of last Tuesday, came into Monday night trade still short over 160,000 contracts -- plenty of fuel for an accelerated rally. However, the lack of progress with China, slack demand, the uncontained African swine fever, and active Brazilian farm selling has weighed on the soy market. Soybean planting progress, which is certainly taking a backseat to corn, was revealed to be just 19%, compared to an average pace of 47% at this time. Soy progress is the slowest since 1995. Until just recently, the fear of additional and unwanted soy acres at the expense of corn and spring wheat was also overhanging this market. Now, it seems farmers are more likely to use prevented planting. The U.S.-China trade talks are on hold with the next discussion likely the end of June at the G20 by presidents Donald Trump and Xi Jinping. The Trump administration's ban on Huawei exports to the U.S., which caused anger on the China side, was just reversed with a 90-day reprieve from the U.S. Commerce Department, and that may be a negotiating ploy by the Trump administration. Also positive for the trade talks were comments from a top U.S. negotiator that talks with China had progressed and he thought a trade deal would be finalized. The rumored second aid payment, if verified, gives the opposite impression. Rain will be heavy the next 10 days and seeding will continue to be a challenge. Both July and November soybean futures would have to rally another 30 to 40 cents to encounter any stiff resistance. DTN's National Soybean Index closed at $7.39 Friday, 83 cents below the July contract.

Wheat:

All three wheat markets continued their surge higher early Tuesday with all three trading above the 50-day moving average, but each of the markets finished just above unchanged for the day. A midday tweet rumored a new administration farm aid package would include 63 cents per bushel for wheat. This was not well received. Chicago July wheat had rallied as much as 75 cents above the low last week with Kansas City July having moved 71 cents higher at one point, before Tuesday's weak close, which was 15 to 17 cents below the highs. Extremely wet weather has affected soft wheat areas and now threatens late-developing hard winter wheat (HRW) crops in Kansas and Oklahoma, where severe and very wet weather has led to ideas of lodging, flooding and disease affecting both quality and quantity. The crop progress report on Monday afternoon painted a much different picture with winter wheat conditions improving 2% to 66% good to excellent -- one of the best readings in years. Key states, Kansas at 60% good to excellent, and Oklahoma at an amazing 88% good to excellent, have not yet reflected a drop in quality that many fear. Spring wheat planting progress made better-than-expected strides with 70% of intended acres now planted, but still behind the average pace of 80%. South Dakota is the primary laggard at just 70% done compared to a 94% average pace, and last year's 92% done at this time. Spring wheat emergence at 26% is half of the normal 51%. As in corn, the heavily short noncommercial traders have been covering those shorts, but have much more to go. Wheat markets were getting very overbought and more of a pullback in prices can be expected following the weak finish. DTN's National HRW Index closed at $4.05 Friday, 15 cents under the July contract and up from its lowest prices in over a year.

Dana Mantini can be reached at Dana.Mantini@dtn.com

Follow him on Twitter @mantini_r

(CZ)

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