DTN Before The Bell Grain Comments

Morning CME Globex Update:

July contracts of corn, soybeans, and wheat were all a little higher early Wednesday, not bothered by light rain in the southwestern Plains or a U.S. dollar index trading at its highest prices in over three months. Other commodities were starting mostly lower.

Other Markets:

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

Corn:

July corn was up 1 3/4 cents early in what appears to be an early effort by noncommercials to take prices higher for a third day. Temperatures continue to be warmer across the Corn Belt this week and conditions will be mostly dry the next five days, a more favorable combination for planting corn. There is light rain falling from Nebraska to northern Texas, offering crops in that dry region limited benefit for a day. In Brazil, conditions have turned drier the past week for their second crop corn and the seven day forecast still looks dry -- a possible bullish factor that deserves monitoring. From a fundamental view, 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 backed down from their April high. DTN's National Corn Index closed at $3.51 Tuesday, down from its highest prices since June 2016 and priced 31 cents below the May contract. In outside markets, the June U.S. dollar index is trading up 0.42 at its highest price in over three months while the June 10-year T-notes are down 8/32nds at a new contract low.

Soybeans:

July soybeans were up 3 1/4 cents early, also starting the day with help from the noncommercial side of the market. Soybean traders may be breathing a small sigh of relief, now that the forecast looks better for corn planting, but there are still bearish hurdles in soybeans' path and most of them stem from the trade dispute between the U.S. and China. As reported by Dow Jones Tuesday, China's soybean imports from Brazil have increased 129% in the first three months of 2018 from a year ago while imports from the U.S. have dropped 21%. President Trump expressed confidence Tuesday that a solution with China could soon be reached, but traders have been more cautious in their recent soybean purchases. Outside the U.S., the fundamental outlook for soybean prices is bullish with China bidding 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. 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 $9.54 Tuesday, up from its March low and priced 68 cents below the May contract.

Wheat:

July Chicago wheat was up 2 3/4 cents and July K.C. wheat was up 3 cents, holding firm while light to moderate showers give winter wheat crops a little relief from Nebraska to northern Texas. The western tip of the Oklahoma Panhandle even got a bit of snow on Wednesday morning. The forecast however, looks dry again the next five days before another chance for light showers returns early next week, just in time for this year's HRW Wheat Tour, sponsored by the Wheat Quality Council. Unfortunately, this year's tour is apt to see what are currently the world's worst crop conditions for winter wheat as Australia and parts of the Canadian Prairie are the only other major regions where dry conditions are presenting possible production threats. From a fundamental view, the outlook for wheat prices remains bearish due to plentiful global supplies and mostly favorable conditions for the world's 2018 wheat production. Technically, the trends remain sideways for all three wheats. DTN's National SRW index closed at $4.43 Tuesday, near the middle of its range in April and 29 cents below the May contract.

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

FollowTodd on Twitter @ToddHultman1

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