DTN Before The Bell Grain Comments

Morning CME Globex Update:

July soybeans were down 5 3/4 cents early Friday, holding a small loss for the week while corn and winter wheat contracts were starting slightly higher. Friday's temperatures will be in the 60s and 70s for most of the Corn Belt, nudging soil temperatures a little higher.

Other Markets:

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

Corn:

July corn was up a penny after a quiet overnight session, staying within the confines of its sideways trading range while a new planting season slowly gets underway. This week's warmer temperatures have been helpful in raising soil temperatures across the Corn Belt, but higher temperatures are generally needed and next week's forecast is on the cool side with a broad coverage of moderate showers coming to the region by Wednesday. In Brazil, conditions have turned drier for the second corn crop as it approaches pollination and so far, the seven-day forecast remains mostly dry. Brazil's situation does have bullish potential for corn prices, especially after this year's drought in Argentina and we will continue to monitor events down south. If bullish concerns in Brazil don't pan out, the outlook for corn prices remains neutral with plenty we still don't know about the new U.S. 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 Thursday, back near its highest prices since June 2016 and priced 30 cents below the May contract. In outside markets, the June U.S. dollar index is up 0.33 after the U.S. Commerce Department said first quarter GDP was up 2.9% from a year ago, more than expected. Also, Korea's two leaders announced an agreement to end nuclear threats and work toward peace.

Soybeans:

July soybeans were down 5 3/4 cents at the morning break, holding a small loss for the week while corn and wheat have traded higher. Among soy products, the main thrust of demand continues to be for soybean meal while July soybean oil suffers from this year's higher crush pace and is trading down 0.26 at another new two-year low. For U.S. soybeans in general, the main concern continues to be this season's lack of demand from China and traders will be watching next week's meeting of the U.S. Treasury Secretary with Chinese officials closely. While we have long seen trade tensions with China as a bearish factor for U.S. soybean prices, we also have to recognize that reconciliation is a bullish possibility, if things were to change. Political outcomes are just one more layer of risk that makes predicting soybean prices difficult in 2018 and another reason we keep a close eye on market clues. For now, 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 $9.60 Thursday, roughly in the middle of its April range and priced 68 cents below the May contract.

Wheat:

July Chicago wheat was up 1 3/4 cents and July K.C. wheat was up 1 1/4 cents early Friday, staying firm in their sideways ranges while the seven-day forecast stays mostly dry for the western edge of the southwestern Plains. Early Friday, Statistics Canada estimated 25.3 million wheat acres in 2018, up 13% from a year ago. Spring wheat acres are expected to increase 15%, one reason Sep Minneapolis wheat is down 6 cents early. The Wheat Quality Council's HRW wheat tour begins next week and will likely verify the 49% poor-to-very poor crop rating that USDA has given Kansas. Tour scouts however, have an interesting way for finding more details along the way and DTN's Mary Kennedy will keep us informed. Outside North America, there are some concerns of dryness in Australia and part of China, but overall conditions remain favorable. 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 $4.51 Thursday, near its high for April and 30 cents below the May contract.

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

FollowTodd on Twitter @ToddHultman1

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