DTN Closing Grain Comments

HRW Wheat Reaches 7-Month High

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
Connect with Todd:
(DTN illustration by Nick Scalise)

General Comments:

Corn was up 4 1/4 cents in the May contract and up 3 1/4 cents in the December. Soybeans were up 12 1/2 cents in the May contract and up 5 3/4 cents in the November. Wheat closed up 20 1/2 cents in the May Chicago contract, up 21 1/4 cents in the May Kansas City, and up 13 cents in the May Minneapolis contract. The March U.S. dollar index is up 0.10 at 90.65. April gold is down $10.20 at $1,307.70 while May silver is down 11 cents and May copper is down $0.0210. The Dow Jones Industrial Average is down 534 points at 24,495. April crude oil is down $0.87 at $60.77. April heating oil is down $0.0226 while April RBOB gasoline is down $0.0363 and April natural gas is up $0.041.

Corn:

May corn closed up 4 1/4 cents Thursday, continuing to find bullish benefit from ongoing droughts in Argentina and the western U.S. Plains. Thursday's satellite map for South America showed rain in northern Argentina, but most other crop areas were dry and the seven-day forecast only expects light amounts for Argentina's main crop region. The Buenos Aires Grain Exchange said 76% of corn is rated poor or very poor and they expect a 37.0 million metric tons (1.5 billion bushels) corn crop, down from 41.0 mmt (1.6 bb) a year ago. Here in the U.S., the eastern Midwest and southeastern U.S. are getting one more day of rain before drier conditions return and give river levels a chance to come down. In spite of recent flooding in the southeastern Midwest, USDA said last week's export sales and shipments of corn totaled 69.0 million and 50.2 million bushels, respectively. The shipments were impressive given the situation, but total 2017-18 corn shipments still show a bearish pace at 28% lower than a year ago. With dry weather support in early 2018, the trend remains up in May corn. DTN's National Corn Index closed at $3.45 Wednesday, priced 37 cents below the May contract and at its highest price in seven months. In outside markets, the stock market is trading sharply lower in spite of bullish economic news from jobless claims, personal income, and U.S. manufacturing reports. Commodities are mixed with metals and energies mostly lower.

Soybeans:

May soybeans closed up 12 1/2 cents at another new contract high of $10.68 Thursday, riding the bullishness of dry weather in Argentina as long as the seven-day forecast continues to look mostly dry for the main crop region. On Thursday, the Buenos Aires Grain Exchange lowered its estimate of Argentina's soybean crop from 47.0 mmt to 44.0 mmt (1.6 bb) and also said 76% of the soybean crop was either in poor or very poor condition. Meanwhile, Thursday's drier weather in Brazil is good for harvest progress and corn planting with a 4.1 billion bushel soybean crop headed to market. USDA said last week's export sales and shipments of soybeans totaled 31.5 million and 33.1 million bushels, respectively, another bearish combination that has total U.S. shipments down 13% in 2017-18 from a year ago. At 8 a.m. CST, USDA said China bought 4.4 million bushels (120,000 mt) of U.S. soybeans and another 4.6 million bushels (126,000 mt) were sold to unknown destinations. Both purchases were split in half between 2017-18 and 2018-19. Even though trade tensions with China are heating up and President Donald Trump said on Thursday he will approve tariffs on steel and aluminum, spot soybean prices find themselves trading at their highest level in a year. For now, the trends remain up in May soybeans and meal. DTN's National Soybean Index closed at $9.76 Wednesday, at its highest price in a year and priced 79 cents below the May contract.

Wheat:

May Chicago wheat closed up 20 1/2 cents and May K.C. wheat was up 21 1/4 cents at a new seven-month high of $5.43 1/2, while the seven-day and extended forecasts continue to look dry for the southwestern U.S. Plains. With conditions so dry and wind expected to pick up, the National Weather Service in Dodge City, Kansas, has issued wildfire warnings for Friday and through the weekend. Talk of drought and higher U.S. prices has not been good for export business. USDA said early Thursday that last week's export sales and shipments of wheat totaled 7.0 million and 12.2 million bushels, respectively, a dismal combination hurt by overseas competition. Total wheat shipments are down 6% in 2017-18 from last year's low pace. It may seem odd to some that U.S. wheat prices are trading this high when there is plenty of wheat available around the world, but the seriousness of this winter's drought took a step up this week and is putting the squeeze on the short side of the market. For now, the trends remain up in May contracts of both, Chicago and K.C. wheat. DTN's National SRW Index closed at $4.58 Wednesday, at its highest price in seven months and priced 37 cents below the May contract. DTN's National HRW Index closed at $4.69, also near its highest price in seven months.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

Todd Hultman