DTN Closing Grain Comments

General Comments:

Corn closed down 2 3/4 cents in the July and down 3 1/2 cents in the December. Soybeans closed down 21 1/2 cents in the July and down 23 cents in the November. Wheat closed up 1/2 cent in the July Chicago, down 5 cents in the July Kansas City, and down 3 3/4 cents in the July Minneapolis. The September U.S. dollar index is up 1.83 at 95.36. August gold is up $57.30 at $1,320.40 while July silver is up $0.45 and July copper is down $0.0450. The Dow Jones Industrial Average is down 515 at 17,497. August crude oil is down $2.26 at $47.85. August heating oil is $0.0556 lower, August RBOB gasoline is $0.0758 lower, and August natural gas is $0.032 lower.

For the week: July corn closed down 53 1/4 cents while December closed down 54 1/2 cents. July soybeans were down 56 1/2 cents while the November was down 69 3/4 cents. July Chicago wheat was down 26 1/2 cents, July Kansas City wheat was down 38 cents, and July Minneapolis wheat was down 22 cents.

Corn:

Let's face it -- Friday was not your typical day in the grain markets, and Friday's lower prices had little to do with rain in the seven-day forecast for the central Plains or any other supply or demand feature. Friday's markets were all about Brexit -- the decision of U.K.'s voters to leave the European Union. The decision, itself, has no direct impact on corn or soybean fundamentals, but it did result in lower grain prices as fearful noncommercials scrambled out of their "at-risk" positions in nearly everything but gold and silver. The timing of Thursday's election was also unfortunate for row crops after they had already been beaten lower this week when rains crossed the Midwest. Grains will likely trade on grain news again next week and traders will need to sober up ahead of Thursday's USDA reports, but it may be very difficult to recapture investor interest again in 2016 unless adverse weather develops. While the demand prospects for corn remain much better than a year ago, July corn prices have suffered serious disappointment this week and are likely to trend sideways until we know more about the next U.S. crop. DTN's National Corn Index closed at $3.52 Thursday, priced 36 cents below the July contract and down 50 cents from its highest price in 11 months. In outside markets, the U.S. dollar index is up 1.83, well below Thursday night's high, but still inflicting a bearish shock to most U.S. commodity prices.

Soybeans:

Much like most commodities, July soybeans closed lower Friday with liquidation coming from investors panicked over the U.K.'s decision to leave the European Union. On its face, Brexit is not the end of the world and it is likely to take at least two years for the political leaders to negotiate the details. The bigger risk for soybeans is the possibility of a larger-than-expected planting estimate from USDA next Thursday and another year of favorable summer weather -- both of which are still possible at this point. The demand side of the market lost its bullish sense of urgency this week, but remains supportive to prices with another big export sale reported early Friday. Apparently, someone out there still understands the value of soybeans because USDA said that 10.3 million bushels (280,500 metric tons) of old-crop soybeans and 4.8 million bushels (131,000 mt) of new-crop soybeans were sold to unknown destinations. We appear to be in for a volatile summer after July soybeans likely suffered heavy noncommercial liquidation this week. DTN's National Soybean Index closed at $10.60 Thursday, priced 65 cents below the July contract and down 48 cents from its highest price in 21 months.

Wheat:

July Chicago wheat closed slightly higher Friday, a bullish and ironic shock, given the U.S. dollar's 1.9% plunge. Although Friday's currency moves increase the likelihood that U.S. wheat sales will take a back seat to Europe, wheat prices were somewhat protected by the fact that noncommercials were already net-short and are in no mood to expand their short commitments after Thursday night's volatile session. Back in the real world, DTN's seven-day forecast is mostly dry for the Northern Plains, but temperatures should remain mild and there is rain expected in the southern Canadian Prairies. With U.S. wheat supplies plentiful and Friday's currencies offering another reason to be short, July Chicago wheat remains under bearish pressure, but is also holding within its sideways range. DTN's National SRW Wheat Index contract closed at $4.29 Thursday, priced 25 cents below the July contract and in the middle of its expanded six-month range. DTN's National HRW Index closed at $3.80, back near its lowest prices in six years.

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

Follow Todd Hultman on Twitter @ToddHultman1

(BAS)

Copyright 2016 DTN/The Progressive Farmer. All rights reserved.