DTN Closing Grain Comments

Soybeans Slide Lower

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

General Comments:

Corn closed down 1/4 cent in the September contract and down 1/2 cent in the December. Soybeans were down 22 3/4 cents in the August contract and down 22 cents in the November. Wheat closed up 3 3/4 cents in the September Chicago contract, up 4 1/4 cents in the September Kansas City, and up 1 3/4 cents in the September Minneapolis contract. The September U.S. dollar index is down .24 at 97.28. August gold is down $3.30 at $1,320.10 while September silver is down $0.01 and September copper is down $0.0095. The Dow Jones Industrial Average is down 86 at 18,485. September crude oil is down $0.96 at $43.23. September heating oil is down $0.0275 while September RBOB gasoline is down $0.0214 and September natural gas is down $0.035.

Corn:

December corn closed slightly lower Monday, held down by this week's crop-friendly forecast and expectations for another week of high crop ratings from USDA later Monday afternoon. Noncommercial liquidation has weighed heavy on corn prices the past five weeks, but Friday's CFTC data showed noncommercials still holding 130,624 net longs as of July 19. Commercial net shorts have dropped to 66,533 in response to corn's lower prices -- an encouraging sign that December corn should eventually be able to find support somewhere between $3.00 and $3.50. Early Monday, USDA said that last week's export inspections of corn totaled 51.4 million bushels, a larger amount that is still neutral-to-bearish because exports will probably fall short of USDA's 1.9 billion bushel estimate by the end of August. December corn remains under bearish pressure, but the pace of selling is likely to slow with commercials looking more willing to respond to these lower prices. DTN's National Corn Index closed at $3.06 Friday, priced 29 cents below the September contract and near its lowest price in over 21 months. In outside markets, the U.S. dollar index is down .24, somewhat cautious ahead of Wednesday's Federal Reserve announcement.

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Soybeans:

November soybeans dropped 22 cents Monday, pressured by mild summer temperatures and more chances for rain across the Midwest as more soybeans begin setting pods. Last week's widely advertised heat wave was hard on livestock, but probably did not hurt crops much as much of the Midwest had decent rain cover east of the Missouri River. Given the benign forecast for the next ten days, the U.S. is likely looking at another soybean crop near 4 billion bushels and that is keeping prices under bearish pressure. Somewhat surprising, Friday's CFTC data showed noncommercial net longs in soybeans at 202,146 as of July 19, down 13,960 from the previous week, but still a big position. The bearish concern here is that falling soybean prices are disappointing all those bullish hopes and, may at some point, trigger liquidation. Monday morning, USDA said that 25.7 million bushels of soybeans were inspected for export last week, a larger-than-normal amount that may give soybeans a chance at reaching USDA's export estimate -- if the final five weeks can average 21.4 million bushels or more. November soybeans are trending lower and remain under bearish pressure in spite of a more favorable demand scenario this year. DTN's National Soybean Index closed at $9.51 Friday, priced 37 cents below the November contract and at its lowest price in over three months.

Wheat:

September Chicago wheat traded higher most of the morning, dipped lower for about an hour, and then finished higher with help from noncommercial short-covering. There was also some bullish news as 20.2 million bushels of wheat were inspected for export last week, adding to the 2016-17 total which is up 29% so far from a year ago. Except for some rain chances in Nebraska and South Dakota, this week's forecast is mostly dry for the spring wheat crop. DTN Canadian Grain Analyst Cliff Jamieson keenly observed in Friday's article, "European Wheat Market Showing Strength" that wheat prices in France are climbing as a result of too much rain. Admittedly, these aren't strong bullish arguments for U.S. wheat prices, but they did help to change the tone on Monday. Friday's CFTC data showed noncommercial net-shorts in Chicago wheat at 92,121 as of July 19, the most since April. Commercials were net long 85,271 contracts, continuing to benefit from and provide support for wheat's cheap prices. September Chicago wheat remains under bearish pressure, but should be able to maintain its roughly sideways trend. DTN's National SRW index closed at $3.93 Friday, priced 33 cents below the September contract and near its lowest cash price in over six years. DTN's National HRW index closed at $3.29, still near its lowest price in over 10 years.

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

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Todd Hultman