DTN Before The Bell Grain Comments

Morning CME Globex Update:

July soybeans are starting the week higher after China and the US appeared to make progress on trade disputes over the weekend. Corn and wheat are modestly higher with Brazil facing another dry seven-day forecast.

Other Markets:

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

Corn:

July corn was up 3 1/2 cents early Monday, challenging its highest prices in nine months while the latest seven-day forecast for Brazil remains mostly dry. Southern Brazil's second corn crop did receive beneficial rain over the weekend, but more will be needed and so far, the forecasts aren't cooperating. With a smaller corn crop anticipated out of Brazil in 2018, US corn exports are likely to do well and may reach USDA's aggressive 2.225 billion bushel estimate. Corn planting has made better progress in May and Monday afternoon's report is likely to show planting ahead of its five-year average pace. Friday's CFTC data showed noncommercials still bullish in corn with 394,310 net longs as of May 15. With fundamental support from crop concerns in Brazil, the trends remain up in both, July corn and new-crop corn. DTN's National Corn Index closed at $3.68 Friday, still near its highest price in 23 months and priced 27 cents below the July contract. In outside markets, the June US dollar is up 0.12, trading near its highest prices in 2018 while outside commodities are mixed.

Soybeans:

July soybeans were up 18 1/2 cents early Monday, ignoring Friday's cancelled sale of 30 million bushels of old-crop soybeans to unknown after AP News reported trade tensions appear to be cooling between the US and China. Details are lacking, but AP reported that China agreed to "substantially reduce" the US trade deficit with China. Later, Treasury Secretary Mnuchin told CNBC that both parties have agreed to suspend tariffs -- bullish news for soybean traders' ears. Meanwhile, the next US soybean crop is being planted ahead of schedule with no significant obstacles in sight. After breaking new five-week lows the previous week, Friday's CFTC data showed noncommercials a little less bullish in soybeans with 155,648 net longs as of May 15, down from 172,647 the previous week. Technically, the trend is down in July soybeans, but still sideways in new-crop soybeans where futures spreads continue to show a bullish commercial outlook. DTN's National Soybean Index closed at $9.30 Friday, near its lowest in three months and priced 65 cents below the July contract.

Wheat:

July Chicago wheat was up 2 3/4 cents and July K.C. wheat was up 2 1/4 cents early, continuing to find support from a seven-day forecast that does not expect much rain around the southwestern US Plains, even while generous amounts will be falling aroundmuch of the Midwest and southeastern US. After watching prices rally higher the past five months, Friday's CFTC data showed noncommercials a little bullish in Chicago wheat with 22,644 net longs as of May 15. It is unusual for noncommercial traders to take the long side in Chicago wheat and has not turned out well the previous five times they tried. If wheat prices go significantly higher from here, they will need help from weather outside of North America and so far, dry weather in Australia has been the largest concern. Fundamentally, it is still difficult for the US to compete with plentiful supplies of global wheat. Technically, the trends remain higher for the July contracts of both, Chicago and K.C. wheat. DTN's National SRW index closed at $4.87 Friday, down from its highest price in ten months and 31 cents below the July contract.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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