DTN Before The Bell Grain Comments

Grains Lower After Drier Weekend

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

July corn was down 2 3/4 cents, July soybeans were down 1 cent, and July Chicago wheat was down 3 cents. At 8 a.m. CDT, USDA announced 4.8 million bushels (130,000 mt) of U.S. soybeans were sold to unknown destinations for 2016-17. Corn, soybeans, and wheat were all starting lower Tuesday after a drier weekend helped give wet areas a break from spring rains. Investors are showing caution early as most commodities are trading lower.

Other Markets:

Dow Jones: Lower
U.S. Dollar Index: Higher
Gold: Lower
Crude Oil: Lower

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Corn:

July corn was down 2 3/4 cents early Tuesday after a weekend of drier weather gave this year's wetter areas a chance to recover from May's showers. This week's forecast allows a few more days of mostly dry weather before the rain returns Friday and Saturday in the southern and eastern Midwest. It still seems likely that some corn acres will be lost in 2017, but it is difficult to tell just how much ahead of USDA's prevented acres estimate on Aug. 10. Friday's CFTC data showed noncommercials moderately bearish in corn with 66,670 net shorts as of May 23. Commercials took advantage of a small gain last Monday and lightened net longs to 60,074. USDA's estimate of lower world ending corn stocks in 2017-18 is lending support to prices and so far, July corn continues to trade in a sideways range. DTN's National Corn Index closed at $3.37 Friday, priced 37 cents below the July contract and near its highest price in 11 weeks. In outside markets, the June U.S. dollar index is up 0.04 while most other commodities are starting lower.

Soybeans:

At 8 a.m. CDT, USDA announced 4.8 million bushels (130,000 mt) of U.S. soybeans were sold to unknown destinations for 2016-17. July soybeans were down 1 cent early Tuesday, still weighed down by last week's new lows and ongoing concerns of record soybean plantings in 2017. Wet planting conditions for corn may result in even more soybean acres, but even USDA's March estimate of 89.5 million acres was already bearish, coming on the heels of Brazil's record harvest earlier in 2017. Friday's CFTC data showed noncommercial traders moderately bearish in soybeans with 47,931 net shorts as of May 23. Commercials stepped up their net longs to 101,585, the most since June 2015 and one source of support even as prices are dropping to new lows. The anticipation of increased soybean supplies in 2017 continues to keep July soybean prices in a downtrend. DTN's National Soybean Index closed at $8.59 Friday, priced 67 cents below the July contract and at its lowest price in over a year.

Wheat:

July Chicago wheat was down 3 cents early in spite of more rain in the forecast for winter wheat in the southern and eastern Midwest late this week. Monday afternoon's Crop Progress report will give an update of winter wheat conditions and may show some improvement as the southwestern Plains have been drier and warmer. Friday's CFTC data showed noncommercials still bearish Chicago wheat with 76,689 net shorts as of May 23. Commercials remain supportive of wheat prices, holding 69,042 net longs. USDA is estimating world wheat production will be down 2% in 2017 and also expects lower U.S. ending wheat stocks. Both are reasonable guesses and should help July Chicago wheat prices hold support at current levels, but traders still have no reason to expect higher prices yet. Until more is known about this year's wheat crops, July Chicago wheat continues to trade sideways. DTN's National SRW index closed at $4.02 Thursday, priced 36 cents below the July contract and down from its highest price in 11 weeks.

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

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Todd Hultman