DTN Closing Grain Comments

Winter Wheat Prices Rebound

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

General Comments:

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

The June U.S. dollar index is down 0.20 at 90.50. June gold is up $10.00 at $1,334.00 while May silver is up 11 cents and May copper is up $0.0215. The Dow Jones Industrial Average is down 525 points at 23,923. June crude oil is down $0.86 at $67.78. June heating oil is down $0.0124 while June RBOB gasoline is down $0.0231 and June natural gas is up $0.034.

Corn:

July corn closed up 2 1/2 cents at $3.90, trying to hold firm on Tuesday with bullish influence from wheat after roughly two weeks of falling prices. Late Monday, USDA said corn was 5% planted, down from the five-year average of 14%. While the slow start is a concern, the current forecast for warmer temperatures ahead looks much better for corn's planting prospects the next few weeks. In Brazil, the second corn crop was doing well until recently, but now has hit a patch of dry weather with no relief expected in the seven-day forecast. On the demand side of the market, U.S. corn shipments have picked up recently, but are down 20% from a year ago. Ethanol production has held roughly steady above a million barrels a day. Fundamentally, the outlook for corn prices remains neutral with the uncertainty of a new growing season ahead. Technically, the trend remains sideways in May corn and up in new-crop corn although prices have fallen back from their April high. DTN's National Corn Index closed at $3.47 Monday, down from its highest prices since June 2016 and priced 31 cents below the May contract. In outside markets, most commodities are mixed while the Dow is down 525 points, reflecting concerns about the trend of rising interest rates.

Soybeans:

July soybeans closed up 1 3/4 cents at $10.34, helped by modest commercial buying after a week and a half of lower prices. Late Monday, USDA said 2% of soybeans were planted, mostly in southern states and on pace with the five-year average. Now that temperatures are warming, corn planting will soon pick up across the Midwest and that should ease concerns about a possible late-season push for more soybean acres. Otherwise, the main concern for soybean prices continues to be the lack of demand from China. According to Dow Jones, China's soybean imports from the U.S. were down 21% in the first quarter of 2018 from a year ago soybean while imports from Brazil were up 129% -- two numbers that say much about the predicament of this year's split market for soybeans. Outside the U.S., the fundamental outlook for soybean prices is much more bullish with Argentina's drought forcing China to bid up Brazil's soybean prices. Here in the U.S., the fundamental outlook is neutral to bearish for old-crop soybean prices while China keeps its purchases minimal. USDA did mention early Tuesday that 4.8 million bushels (mb) (130,000 metric tons) of U.S. soybeans were sold to Argentina, 2.2 mb (60,000 mt) of which were for the current season. Technically, the trend is sideways in old-crop soybeans with concerns of failing momentum. In new-crop soybeans, the trend is up, but currently stalled. DTN's National Soybean Index closed at $9.52 Monday, up from its March low and priced 69 cents below the May contract.

Wheat:

July Chicago wheat closed up 9 3/4 cents and July Kansas City wheat was up 9 1/4 cents at $5.12, helped by light commercial buying, which happened in spite of light showers in western Kansas and southern Nebraska. Light to moderate rain amounts are still possible in the southwestern Plains on Wednesday, but drought remains the predominant concern of the region. Late Monday, USDA said 13% of winter wheat was headed and 31% was rated good to excellent, the same as last week. DTN's Winter Wheat Condition Index inched up to 48, suggesting the worst winter wheat conditions for this time of year since 2011. In Kansas, 49% of the winter wheat crop was rated either poor or very poor. USDA also said 3% of spring wheat was planted, down from the five-year average of 25% and still mostly confined to the Pacific Northwest. Sep Minneapolis wheat closed up 4 1/4 cents with commercial buyers offering support after three consecutive days of falling prices, linked to hope for better planting conditions ahead. Fundamentally, the outlook for wheat prices remains bearish while most other wheat regions are doing well, dry conditions in Australia being the lone exception. Technically, the trends remain sideways for all three wheats with prices near the lower end of their ranges. DTN's National SRW index closed at $4.32 Monday, near the middle of its range in April and 29 cents below the May contract. DTN's HRW index closed at $4.44, also in the middle of its April range.

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

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(CZ)

Todd Hultman