DTN Early Word Grains
Grains Quiet, China's Debt Downgraded
July corn was down 1/4 cent, July soybeans were up 1/4 cent, and July Chicago wheat was down 1 1/4 cents.
CME Globex Recap:Grains are staying close to Tuesday's closes early while most other commodities are starting a little lower after Moody's downgraded its rating on China's debt overnight. Scattered showers continue to fall east of the Mississippi River with heavy amounts expected in Indiana and Ohio the next five days.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed up 43.08 points at 20,937.91. The NASDAQ Composite was up 5.09 points at 6,138.71 and the S&P 500 was up 4.40 points at 2,398.42 Monday. DJIA futures were down 14 points early Wednesday morning. Asian markets were a little higher with Japan's Nikkei up 129.70 points (0.7%), Hong Kong's Hang Seng up 25.35 points (0.1%), and China's Shanghai Composite up 2.13 points (0.1%). European markets were mixed early Wednesday with London's FTSE 100 up 17.18 points (0.2%), Germany's DAX down 14.67 points (-0.1%), and France's CAC 40 down 1.07 points (-0.02%). The U.S. dollar index was up 04.03 at 97.38 while the June euro was down 0.00070 at 1.11915. June 30-year T-Bonds were up 5/32nds at 153'14 while June gold was down $3.50 at $1,252.00. July crude oil was up 0.11 at $51.58 while July Brent crude was up $0.19 at $54.34. Soybeans at the Dalian Exchange were steady to higher overnight and Malaysian palm oil futures are down 1.4%.
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BULL | BEAR | ||
1) | July corn continues to hold above its March low of $3.61 3/4 while the seven-day forecast remains excessively wet for the eastern Midwest. | 1) | So far, growing conditions remain favorable for Brazil's second corn crop which is on track for a record harvest. |
2) | In spite of last week's drop in Brazil's real, July soybeans continue to trade above the April low of $9.41 1/4 with help from Friday's commercial buying. | 2) | Brazil's record soybean harvest continues to compete for export business. |
3) | Noncommercials remain heavily bearish in Chicago wheat, but it seems highly likely that U.S. wheat production will be down in 2017. | 3) | It is old news, but 2017-18 will start with the largest carryover of U.S. wheat in thirty years. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN July corn is down 1/4 cent early Wednesday, staying in the middle of its sideways range with no sign yet of taking a new direction. Scattered showers continue to fall around the eastern half of the U.S., making replanting difficult in the eastern Corn Belt and giving young crops a less than ideal start. The Dakotas, on the other hand, are a little dry with a mostly dry forecast ahead. Corn prices however, are showing no concern and remain content within the confines of their narrow, sideways range for now.
SOYBEANS July soybeans are up 1/4 cent early, still finding it difficult to recover from the selling that went along with last Thursday's unexpected drop in Brazil's real. In early April, July soybeans posted an outside weekly reversal which is potentially bullish, but prices have struggled to rally since then and are now threatening to take out the low of $9.41 1/4. On one hand, failed corn acres may add to soybean plantings, but there may also be soybean acres lost as well so we are in for a long summer of guessing. In outside markets, Moody's cut its rating on China's debt from Aa3 to A1 overnight, the first downgrade since 1989, reported Bloomberg news. China's stock market is steady after the rating outlook was then changed from negative to stable.
WHEAT July Chicago wheat is down 1 1/4 cents early, with drier weather over the southwestern Plains while light showers continue to fall on winter wheat in the eastern Midwest. Given this year's smaller planting, soggy conditions, and presence of mosaic virus, it seems clear that U.S. wheat production will be down in 2017, while the rest of the world appears off to a good start overall. The one exception noted in Tuesday's International Crop Summary from USDA is eastern China where hot, dry weather has reduced soil moisture. July Chicago wheat is chopping roughly sideways and appears to be building a base of support in the low $4s, but lacks a bullish fundamental argument to lift prices higher.
DTN Cash | Change From | National | Contract | Change from | |
Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
Corn: | $3.33 | -$0.06 | -$0.37 | Jul | -$0.001 |
Soybeans: | $8.81 | -$0.08 | -$0.68 | Jul | $0.002 |
SRW Wheat: | $3.92 | -$0.04 | -$0.37 | Jul | $0.005 |
HRW Wheat: | $3.51 | -$0.05 | -$0.79 | Jul | $0.007 |
HRS Wheat: | $5.14 | -$0.05 | -$0.40 | Jul | $0.002 |
Todd Hultmancan be reached at todd.hultman@dtn.com
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