DTN Closing Grain Comments

General Comments:

Corn was down 6 cents in the July contract and down 6 cents in the December. Soybeans were down 11 cents in the July contract and down 11 cents in the November. Wheat closed down 6 1/2 cents in the July Chicago contract, down 7 1/2 cents in the July Kansas City, and down 16 1/4 cents in the July Minneapolis contract.

The June U.S. dollar index is up 0.67 at 94.80. August gold is down $3.70 at $1,305.30, while July silver is down 14 cents and July copper is down $0.0155. The Dow Jones Industrial Average is down 406 points at 24,347. July crude oil is down $1.23 at $66.65. July heating oil is down $0.0229, while July RBOB gasoline is down $0.0367 and July natural gas is down $0.077.

Corn:

July corn closed 6 cents Tuesday to $4.00, unable to hold its earlier gains even though Brazil's second corn crops remain under stress from dry weather. The seven-day forecast for Brazil remains mostly dry with a chance of showers for southern Brazil in the extended forecast. Here in the U.S., most of the Corn Belt is expecting rain this week, except for northern Missouri where conditions have been dry. Tuesday afternoon's Crop Progress report should show better planting progress across the northern states and generally favorable corn crop conditions to start the new season. Tuesday morning, USDA said 67.1 million bushels of corn were inspected for export, putting total inspections down 12% from a year ago with three months and one week to go. At 8 a.m. CDT, USDA reported 9.1 million bushels (231,248 mt) of U.S. corn were sold to unknown destinations, 8.0 million bushels of which were for 2018-19. With dry conditions in Brazil giving corn prices bullish potential, Friday's CFTC data showed noncommercials staying bullish in corn as of May 22, holding 400,338 net longs. Technically, Tuesday's sell-off left a bearish outside reversal on the daily chart while the trends remain up for both, July corn and new-crop corn. DTN's National Corn Index closed at $3.73 Friday, near its highest price in 23 months and 33 cents below the July contract. In outside markets, the June U.S. dollar index is trading up 0.67 at its highest prices in six months as political problems in Italy are sending their bond prices lower and putting the euro under bearish stress.

Soybeans:

July soybeans dropped 11 cents to $10.30 1/2, posting a bearish daily outside reversal along with news that the White House was moving forward on $50 billion of tariffs and other punitive measures against China -- a direct contrast to last week's agreement to suspend tariffs with China. In Brazil, truckers continue to strike against higher fuel prices, leading President Temer to agree to subsidize diesel prices by 10% for the next 60 days. Even though the strike has crippled the movement of goods through the country, Brazil's FOB soybean prices are showing no signs of panic, trading three cents below the FOB price in New Orleans. Movement of U.S. soybeans continues to be a bearish concern for old-crop prices. Monday morning, USDA said 21.2 million bushels of soybeans were inspected for export, putting total inspections down 9% in 2017-18 and still below USDA's estimate for a 5% drop. Even though it is difficult to explain traders' optimism, Friday's CFTC data showed noncommercials still bullish, but slowly trimming their holdings, from 155,648 to 143,470 as of May 22. For now, the trends are sideways in both, July and new-crop soybeans. New-crop futures spreads continue to show a bullish commercial outlook. DTN's National Soybean Index closed at $9.76 Friday, priced 66 cents below the July contract and staying below resistance at $10.00.

Wheat:

July Chicago wheat closed down 6 1/2 cents and July K.C. wheat was down 7 1/2 cents to $5.56 1/2, both backing down from Friday's new 10-month highs. The southwestern U.S. Plains is still facing a mostly dry forecast with hot temperatures over the weekend hanging on through Friday. Southern Russia is another wheat region with hotter-than-normal temperatures expected this week, but Tuesday's wheat prices showed more nervousness about trading at new highs. Tuesday afternoon's updated winter wheat crop rating from USDA will still look bad in the southwestern Plains, but may show improvement in other parts of the country. Friday's CFTC data showed noncommercials a little more bullish in Chicago wheat, having increased net longs from 22,644 to 41,849 as of May 22. Fundamentally, both sides of the wheat market are likely to be cautious near these prices until more is known about this year's world wheat production. In spite of Tuesday's losses, the trends are currently higher for all three wheats. Dec cotton, one of wheat's competitors for land, traded up its 4-cent limit Tuesday, supported by flooding concerns from Subtropical Storm Alberto in the southeastern U.S. DTN's National SRW index closed at $5.13 Friday, at its highest price in ten months and 30 cents below the July contract. DTN's National HRW index closed at $5.29, at its highest price in over two years.

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

Follow Todd Hultman on Twitter @ToddHultman1

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