DTN Closing Grain Comments

Grains Slapped Down, Rain Takes a Break

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

General Comments:

Corn was down 7 1/4 cents in the July contract and down 6 3/4 cents in the December. Soybeans were down 13 3/4 cents in the July contract and down 9 1/2 cents in the November. Wheat closed down 8 3/4 cents in the July Chicago contract, down 4 1/4 cents in the July Kansas City and down 3/4 cent in the July Minneapolis contract.

The June U.S. dollar index is down 0.11 at 97.25. June gold is down $6.20 at $1,261.90 while July silver is up 7 cents and July copper is up $0.0010. The Dow Jones Industrial Average is down 44 at 21,036. July crude oil is down $0.13 at $49.67. July heating oil is down $0.0080 while July RBOB gasoline is down $0.0002 and July natural gas is down $0.154.

CORN:

July corn closed down 7 1/4 cents Tuesday, greeted by a smack down of commercial selling after returning back from a drier three-day weekend. This week's forecast expects a couple more days of drier weather before rains return to the southern and eastern Midwest on Friday and Saturday. The extended forecast is also showing more chances for rain, but traders were not in the mood to hear about bullish concerns on Tuesday. Earlier, USDA said 47.0 million bushels of corn were inspected for export last week, bullish enough to keep total inspections up 52% from a year ago with just over three months remaining in 2016-17. Friday's CFTC data showed noncommercials moderately bearish in corn with 66,670 net shorts as of May 23. Commercials trimmed net longs to 60,074. Brazil's second corn crop continues to do well, and there will be more competition from South American supplies the next few months, but USDA is expecting enough world demand in 2017-18 to reduce global ending corn stocks. So far, July corn continues to trade in a sideways range with support at $3.61 3/4. Keep in mind that corn prices tend to turn more volatile in June -- a tendency that may have already started. 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 down 0.11 while most other commodities are lower.

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SOYBEANS:

July soybeans closed down 13 3/4 cents Tuesday, extending the downtrend that resumed on Thursday when July soybeans posted their lowest close in over a year. The current stretch of drier weather is more favorable for fieldwork and adds to concerns that more soybeans will be planted in 2017, possibly even more than USDA's March estimate of 89.5 million acres. With no extreme heat in the forecast and little sign of drought outside the Dakotas, the early anticipation for growing conditions is looking bearish outside of the areas that caught too much rain. 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, but so far, it has not been enough to stop the downtrend. Neither has this season's increased export pace. Tuesday morning, USDA said 12.3 mb of soybeans were inspected for export last week, a bullish amount that has total inspections up 17% in 2016-17. USDA also said 4.8 mb (130,000 metric tons) of U.S. soybeans were sold to unknown destinations for 2016-17. While demand for soybeans remains active, the anticipation of increased supplies in 2017 continues to pressure prices lower. 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 closed down 8 3/4 cents Tuesday after a weekend of drier and warmer weather gave winter wheat crops a brief chance to recover from a wet May, especially in parts of the eastern Midwest where rains have been persistent. More rain is expected to return to the southern and eastern Midwest late this week, so potential problems have not disappeared. So far, noncommercials are staying bearish as Friday's CFTC data showed 76,689 net shorts among them in Chicago wheat as of May 23. Commercials remain supportive of wheat prices, holding 69,042 net longs. With U.S. production expected to be down in 2017 and Canada likely falling short on wheat acres, this year's wheat prices appear to have a good argument for holding steady in the low-$4s but still aren't convincing potential buyers. Tuesday's inspections report from USDA brought the total to 993 mb, 42 mb shy of USDA's export estimate with six days left in the 2016-17 season. DTN's National SRW index closed at $4.02 Friday, priced 36 cents below the July contract and down from its highest price in eleven weeks. DTN's National HRW index closed at $3.59, down from its highest price in 10 months.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman