DTN Before The Bell Grain Comments

Soybeans, Spring Wheat Starting Higher

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

Morning CME Globex Update:

December corn was up 2 cents, November soybeans were up 7 1/4 cents, and July K.C. wheat was up 2 3/4 cents. November soybeans and July Minneapolis wheat were leading grains higher at Tuesday's morning break, influenced by modest drops in USDA's latest crop ratings. A chance for hotter temperatures in the extended forecast is also getting attention from traders ahead of Friday's USDA reports.

Other Markets:

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

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Corn:

December corn was up 2 cents with a dry day expected across the Midwest. Temperatures will be mostly pleasant, but in the 90s on the western edge of the Corn Belt. Monday afternoon's Crop Progress report kept USDA's good-to-excellent rating unchanged at 67% for corn, but also showed an expansion of poor-to-very poor ratings in Nebraska, Minnesota, and the Dakotas as dry conditions spread out from the northwestern Plains. DTN's Corn Condition Index of 161 matched the lowest value in four years and continues to suggest that corn will not see record yields in a year when acres are expected to be lower. Speaking of acres, USDA's next estimate of corn plantings will be released Friday along with June 1 corn stocks and both numbers are capable of surprising prices. Many are expecting 90.0 million corn acres or less after a wet spring, but June 30 numbers are notoriously difficult to guess. Until more is known about this year's corn crop, the trend in December corn remains down. DTN's National Corn Index closed at $3.21 Monday, priced 38 cents below the July contract and near its lowest price in twelve weeks. In outside markets, the September U.S. dollar index is down 0.62 after European Central Bank President Draghi recognized a "strengthening and broadening recovery in the euro area," reported Bloomberg news.

Soybeans:

November soybeans were up 7 1/4 cents after USDA said late Monday that 9% of soybeans were blooming and 66% were rated good-to-excellent. DTN's Soybean Condition Index dropped 3 points to 158 with double digit poor-to-very poor ratings in the Dakotas and Indiana. DTN's seven-day forecast is still mostly bearish for row crops, but heavy rain amounts from Iowa to Ohio will not all be welcome. In the extended forecast, there is a chance of high pressure ridging (hot weather) that will be talked about, but it is not clear yet just where it will be positioned or how long it will last. In addition to weather, soybeans' other concerns are Friday's Acreage and Grain Stocks reports from USDA. USDA set the planting target high in March at 89.5 million acres, but an even higher number is possible and the threat of that is likely to keep gains limited this week. With increased soybean supplies expected in 2017-18, November soybeans remain in a downtrend. DTN's National Soybean Index closed at $8.43 Monday, priced 64 cents below the July contract and near its lowest price in over a year.

Wheat:

July K.C. wheat was up 2 3/4 cents in spite of nearly ideal harvest weather in the southwestern Plains. Early Tuesday, USDA said 41% of the winter wheat harvest was finished with Illinois at 78% and Kansas at 48% complete. Not surprisingly, USDA's good-to-excellent rating for spring wheat slipped again, from 41% to 40%, once again putting DTN's Spring Wheat Condition Index at its lowest value since 1988 while the northwestern Plains suffer drought conditions. The region may catch some rain the next seven days, but more continues to be needed. Both Chicago and K.C. contracts have fallen back from last week's three-month highs and will have trouble extending their uptrends without additional help from weather. July Minneapolis wheat however, is up 6 3/4 cents, actively pushing higher and at its highest spot price in nearly three years. Wheat prices are also getting help from Tuesday morning's lower U.S. dollar index. DTN's National SRW index closed at $4.30 Monday, priced 20 cents below the July contract and down from its highest price in a year.

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

Follow Todd on Twitter @ToddHultman1

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Todd Hultman