DTN Closing Grain Comments

Winter Wheat Ignores Rain, Leads Grains Higher

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

General Comments:

Corn was up 5 3/4 cents in the July contract and up 5 3/4 cents in the December. Soybeans were up 5 1/4 cents in the July contract and up 6 cents in the November. Wheat closed up 14 3/4 cents in the July Chicago contract, up 14 1/2 cents in the July Kansas City, and up 7 3/4 cents in the July Minneapolis contract.

The June U.S. dollar index is up 0.43 at 90.98. June gold is down $9.70 at $1,323.30 while May silver is down 18 cents and May copper is down $0.0125. The Dow Jones Industrial Average is up 12 points at 24,036. June crude oil is up $0.11 at $67.81. June heating oil is up $0.0012 while June RBOB gasoline is down $0.0117 and June natural gas is down $0.003.

Corn:

July corn closed up 5 3/4 cents at $3.95 3/4 Wednesday, an unexpected burst of noncommercial buying on slightly higher volume that took the price to its highest close in over a week. There was no obvious explanation for Wednesday's higher prices, other than the recent bout of dry weather that DTN has been reporting over Brazil's second corn crop. The five-day forecast remains dry for Brazil and will continue to get our attention as corn is approaching pollination time in Brazil. Here in the U.S., corn planting prospects are looking better with warmer temperatures and mostly dry weather expected across the Corn Belt the next seven days. Wednesday's light to moderate showers from Nebraska to central Texas offered some benefit to crops in that drought-stricken region. On the demand side, the U.S. Department of Energy said ethanol production dropped from 1.009 million to 985,000 barrels per day last week, the lowest since October. Ethanol inventory increased from 21.3 to 21.7 million barrels, but had no bearish impact on Wednesday's prices. From a fundamental view, the outlook for corn prices remains neutral with plenty of open questions for the 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 0.43, at its highest price in over three months while June 10-year T-notes are down 10/32nds, a new contract low which also means higher interest rates.

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Soybeans:

July soybeans closed up 5 1/4 cents at $10.39 1/4, a mix of commercial and noncommercial buying with no obvious explanation. Wednesday's turn higher in soybeans after a week and a half of lower prices may have been a mix of relief that corn plantings should pick up soon and bullish influence from the day's corn and soybean meal trade. July soybean meal closed up $4.20, supported by commercial buying in both, old and new-crop meal contracts. July soybean oil, the weak sister of the soy complex, stayed home from Wednesday's bull party and fell 0.21 cent to a new two-year low of 31.06 cents. Earlier Wednesday, USDA's attache estimated Brazil's next soybean crop in 2018-19 at 115.0 mmt (4.23 bb) on 88.5 million planted acres, a 2% increase in planted area. It is too early to make a guess about next year's crop size, but the report offered another reminder that Brazil's soybean acres continue to show steady expansion. 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 closed up 14 3/4 cents and July K.C. wheat was up 14 1/2 cents at $5.26 1/2, rebounding a second day higher and giving a raspberry to Wednesday's light and moderate showers as they offered limited benefit to the toughest drought areas of the southwestern Plains. The forecast turns drier for the region the next five days before another chance for light showers returns early next week, just as the Wheat Quality Council's HRW Wheat Tour gets underway. With USDA rating 49% of winter wheat in Kansas either poor or very poor, the 2018 tour is going to be surveying the world's worst wheat conditions. There are also concerns of dry weather in Australia and part of Canada, but most of the world's major wheat regions are currently showing favorable soil moisture. From a fundamental view, the outlook for wheat prices remains bearish due to plentiful global supplies and generally favorable conditions for 2018 global wheat production. Technically, the trends remain sideways for all three wheats, continuing to show support from the anticipation of lower production in the U.S. 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. 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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman