DTN Before The Bell Grain Comments

Morning CME Globex Update:

July soybeans were up 4 cents at the morning break with support showing once again from commercial buying in soybean meal. Corn and winter wheat were starting a little lower, small retreats after Wednesday's gains. At 8 a.m. CDT, USDA said 4.2 million bushels (107,600 mt) of U.S. corn were sold to unknown destinations for 2017-18.

Other Markets:

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

Corn:

At 8 a.m. CDT, USDA said 4.2 million bushels (107,600 mt) of U.S. corn were sold to unknown destinations for 2017-18. July corn was down a half-cent earlier Thursday, a slight pause after putting on a dime the past three days. Except for some early showers in the southeastern U.S., the central U.S. is dry and mostly clear Thursday with another day of warm temperatures expected to help planting conditions. The seven day forecast is mostly dry across the Corn Belt until early next week when beneficial showers are expected to come to the drier areas of southern Iowa and northern Missouri. Early Thursday, USDA said last week's export sales and shipments of corn totaled 27.4 and 67.0 million bushels respectively, a neutral-to-bearish showing for the week. Total corn shipments are now down 18% in 2017-18 from a year ago. Fundamentally, the outlook for corn prices remains neutral with plenty we still don't know about the new growing season ahead. Technically, the trend remains sideways in May corn and up in new-crop corn. DTN's National Corn Index closed at $3.56 Wednesday, back near its highest prices since June 2016 and priced 30 cents below the May contract. In outside markets, the June 10-year T-notes are up 9/32nds, taking a little pressure of the U.S. dollar index, which is trading down 0.19.

Soybeans:

July soybeans were up 4 cents at the morning break, helped by a $2.40 gain in July soybean meal and early evidence of commercial buying. It is somewhat of a relief for soybean prices that the weather forecast is currently looking more promising for planting corn so fewer acres are apt to switch to soybeans in 2018. The main bearish concern this year continues to come from China's lack of involvement in U.S. exports and we saw more of that early Thursday. USDA said last week's export sales and shipments of soybeans totaled 13.6 and 16.4 million bushels respectively, a neutral-to-bearish combination that keeps total shipments down 13% from a year ago. Indonesia was named as last week's top buyer and the only mention of China was for a small cancellation. Fundamentally, the outlook for soybean prices is bullish outside the U.S. 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 U.S. purchases to a minimum. 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 $9.59 Wednesday, roughly in the middle of its April range and priced 68 cents below the May contract.

Wheat:

July Chicago wheat was down 3 cents and July K.C. wheat was down 3 1/4 cents early Thursday, dialing back part of Wednesday's gains. It seems backwards for wheat to trade higher on the day when rain is falling in the southwestern Plains and then pull back on the first returning day of dry weather, but there has never been a law, which says markets have to make sense.Keep in mind, Wednesday's rain is not included in the calculation of Thursday's U.S. Drought Monitor and that map showed little change early Thursday. While the U.S. is facing lower wheat production in 2018, conditions in Europe, Ukraine, and southern Russia are currently favorable and potentially bearish for wheat prices. The world's plentiful supplies of old-crop wheat have made U.S. exports difficult in 2017-18 and we saw more evidence of that early Thursday. USDA said last week's export sales and shipments of wheat totaled 10.9 and 21.6 million bushels respectively, bearish amounts that have total wheat shipments down 11% in 2017-18 from a year ago. Fundamentally, it is going to be difficult for wheat prices to make new highs as long as the major wheat regions are doing well. 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 $4.57 Wednesday, near its high for 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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