DTN Before The Bell Grain Comments

Rain Forecast Sends HRW Wheat Lower

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

Morning CME Globex Update:

July K.C. wheat was down 10 1/2 cents early Monday, facing a forecast for rain in the southwestern and southern U.S. Plains later this week. May corn was a little lower and May soybeans a little higher after the Midwest got hit with another winter storm over the weekend.

Other Markets:

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

Corn:

May corn was down 1 3/4 cents early Monday after much of the northern Corn Belt encountered heavy snow over the weekend and the eastern Corn belt took on more rain. Corn belt temperatures are expected to stay below average the next ten days, which will keep the pace of planting slow early in 2018. Meanwhile, Brazil's second corn crop is doing well with light showers expected in central Brazil this week. Friday's CFTC data showed noncommercials staying bullish in corn as of Apr. 10, increasing net longs from 367,317 to 382,304, the second most bullish position since September 2011. This heavy optimism eventually presents a bearish risk of disappointment, should the corn crop eventually get planted. For now, the trend in May corn remains sideways and the trend in December corn is up. DTN's National Corn Index closed at $3.52 Friday, near its highest prices since June 2016 and priced 34 cents below the May contract. Outside markets are fairly calm considering the U.S., U.K., and France conducted strikes against chemical sites in Syria over the weekend. According to AP News, the Pentagon said the strikes were successful and not deflected by Syria or Russia. The June U.S. dollar index is down 0.27 and Dow Jones futures are up 160 points.

Soybeans:

May soybeans were up 2 3/4 cents early Monday, supported by light commercial buying in soybeans and meal after another weekend of wintry weather across the Midwest. Soybeans have the luxury of a shorter season and don't have to worry about early planting conditions, but traders will continue to keep an eye on corn planting progress, which is starting out slow this spring and may later add to soybean acres. Friday's CFTC data showed noncommercials staying bullish in soybeans with 210,265 net longs as of Apr. 10, near the most since July 2016. Because of U.S. trade arguments with China, the soybean market finds itself in an unusual position where soybean supplies are strained and prices are bullish outside the U.S. while soybean supplies are comfortable and demand is sluggish in the U.S. The wall between these two markets however, is not completely solid and U.S. soybean prices are showing some bullish influence from outside conditions. For now, the trend in old-crop soybeans is sideways and near the upper end of its trading range. The trend in new-crop soybeans remains up with signs of strong commercial buying interest in future spreads. DTN's National Soybean Index closed at $9.83 Friday, down from its highest prices in over a year and priced 71 cents below the May contract.

Wheat:

July Chicago wheat was down 5 1/4 cents and July K.C. wheat was down 10 1/2 cents early Monday, pressured by rain in this week's forecast for the southwestern U.S. Plains -- something that hasn't been seen much yet in 2018. Of course, some of the winter wheat is beyond hope after this winter's drought, but there is still time for wheat crops to bounce back in marginal areas, making harvest estimates difficult. Friday's CFTC data showed noncommercials turned slightly bullish in Chicago wheat as of Apr. 10, holding 5,359 net longs. Commercials took advantage of wheat's highest prices in a month and reduced net longs from 24,859 to 5,331. It may not make sense, but Sep Minneapolis wheat is down 4 cents after more snow was dumped on the northern Plains over the weekend. The bigger factor for wheat prices in 2018 will come from outside the U.S. and so far, conditions in Europe, Ukraine, and southern Russia are considered mostly favorable. For now, the trends remain sideways for all three wheats with winter wheat prices falling back toward the lower end of their trading range. DTN's National SRW index closed at $4.41 Friday, down from its highest prices in eight months and 32 cents below the May contract.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman