DTN Closing Grain Comments

Winter Wheat Ends Higher, Wildfire Risk Continues

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

General Comments:

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

The June U.S. dollar index is up 0.06 at 89.29. June gold is up $4.60 at $1,354.10 while May silver is up 44 cents and May copper is up $0.0835. The Dow is up 12 points at 24,798. June crude oil is up $1.81 at $68.32. June heating oil is up $0.0313 while June RBOB gasoline is up $0.0259 and June natural gas is up $0.002.

Corn:

May corn closed up 2 3/4 cents at $3.83 Wednesday, staying quiet in the middle of its sideways trading range while producers wait for better planting conditions. Wednesday's weather map started with snow in the Dakotas and northeastern Nebraska that moved into northern Iowa and southern Wisconsin as the day progressed. Temperatures are expected to gradually get warmer by Sunday but will still be too cold for planting in much of the Corn Belt, especially in the snow-covered northern states. This is an awkward time of year for corn in that little planting is taking place, but it is still too early to cut corn acre estimates as one or two warm weeks in May could change things dramatically. On the demand side, the U.S. Energy Department (DOE) said last week's ethanol production fell from 1.034 million barrels to 1.009 million barrels per day while ethanol inventory fell from 21.8 million barrels to 21.3 million barrels. RFS waivers remain a source of concern, but so far, ethanol production remains at a supportive level for corn prices. For now, the fundamental outlook for corn remains neutral. Technically, the trend remains sideways in May corn and up in new-crop corn. DTN's National Corn Index closed at $3.47 Tuesday, down from its highest prices since June 2016 and priced 33 cents below the May contract. In outside markets, most commodities are higher and June crude oil is up $1.14 after Tuesday's crude oil inventory from DOE was down 1.1 million barrels and less than expected.

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Soybeans:

May soybeans ended down 4 1/4 cents at $10.41 3/4 Wednesday, weighed down by a loss of $4.50 in May soybean meal with commercial sellers at work. There wasn't much volume in Wednesday's soybean trade and May prices are basically treading water, caught between the bullishness of rising soybean prices in Brazil and the bearishness of sluggish demand here in the U.S. The contrast of bullish market clues outside the U.S. and neutral-to-bearish clues in the U.S. is likely to continue while the U.S. and China remain at odds over trade terms. Brazil's record harvest in early 2018 should keep China well-supplied through summer, but by fall, China is likely to have a greater need for U.S. soybeans. New-crop spreads showed narrower bullish inverses on Wednesday, but were still bullish. For now, demand for U.S. soybeans continues to drag, leaving the trend sideways in old-crop soybeans and up in new-crop soybeans. DTN's National Soybean Index closed at $9.75 Monday, down from its highest prices in over a year and priced 71 cents below the May contract.

Wheat:

July Chicago wheat was up 7 3/4 cents and July Kansas City wheat was up 8 1/4 cents at $5.07 3/4 Wednesday, making another effort to turn higher while wildfires remain a serious concern in the southwestern U.S. Plains. Eastern Colorado got hit with extremely high winds Tuesday that are not as intense in Kansas and northern Texas on Wednesday, but are still dangerous for those trying to contain wildfires. The latest seven-day forecast expects light-to-moderate showers Friday across the southwestern Plains, but not as much as was expected Monday, and the rain is certainly not looking like a drought-buster at this point. While drought and wildfires in the U.S. continue to get traders' attention, global production will have a big say in 2018 wheat prices, and so far, no significant problems are being reported. Fundamentally, wheat remains in a bearish situation. Technically, the trends remain sideways for all three wheats. DTN's National SRW index closed at $4.36 Tuesday, down from its highest prices in eight months and 31 cents below the May contract. DTN's HRW index closed at $4.77, down from its highest price in two years.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman