DTN Before The Bell Grain Comments

Row Crops Start a Little Higher, Eye Trade Talks

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

July contracts of corn and soybeans were a little higher at the morning break with traders not knowing what to expect from the next chapter of trade talks this weekend in China. All three wheats were starting a little lower with rain in North Dakota.

Other Markets:

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

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Corn:

July corn was up a penny early Friday with rain falling around North Dakota and Tennessee that is expected to expand across the central Midwest the next two days. Next week will be interesting with a drier forecast for the Corn Belt along with hotter temperatures west of the Mississippi River. The most bullish factor for corn at this time continues to be dry weather in Brazil. Friday's satellite map shows a possibility of rain in southern Brazil, which is also in the seven-day forecast while Mato Grosso stays dry. Early Friday, USDA said last week's export sales and shipments of corn totaled 39.1 and 74.6 million bushels respectively, a neutral-to-bullish combination that puts total corn shipments down 10% in 2017-18 from a year ago with just over three months to go. Technically, the trends in corn are currently up for both, old-crop and new-crop corn. DTN's National Corn Index closed at $3.62 Thursday, down from its highest price in 23 months and 32 cents below the July contract. In outside markets, the June U.S. dollar index is up 0.24 after the U.S. Labor Department said non-farm payrolls increased 223,000 in May, more than expected. The U.S. unemployment rate improved from 3.9% to 3.8% in May.

Soybeans:

July soybeans were up 4 1/4 cents early, still under bearish pressure in its sideways range as U.S. Commerce Secretary Ross gets ready for another weekend of trade talks in China. The bullish news for U.S. soybean prices is that China has not yet enacted its 25% tariff proposal on soybeans. It would be difficult for China to enforce as they will likely need U.S. soybeans sometime in the fall, but in this volatile political environment, anything is possible. Early Friday, USDA said last week's export sales and shipments of soybeans totaled 10.0 and 23.8 million bushels respectively, a bearish combination for the week that has total soybean shipments down 10% in 2017-18 from a year ago. New-crop soybean sales totaled 28.4 million bushels. Technically, the sideways trend in Nov soybeans is holding firm and new-crop spreads show a weakening of bullish inverses. The trend in July soybeans is also sideways, but lacks the same commercial support as demand for old-crop soybeans remains a bearish concern. DTN's National Soybean Index closed at $9.54 Thursday, priced 65 cents below the July contract and staying below major resistance at $10.00.

Wheat:

July Chicago wheat was down 6 1/4 cents and July K.C. wheat was down 5 1/2 cents early Friday, staying down on the week after failing to sustain new ten-month highs on Tuesday. The seven-day forecast looks favorable for spring wheat with rain expected in the northern U.S. Plains and Canadian Prairies, but remains largely dry for the southwestern U.S. Plains with extreme heat adding further stress to winter crops on Friday. Exporting U.S. wheat has been a difficult task in 2018 while the world has plenty and Friday's report showed more of the same. USDA said last week's export sales and shipments of wheat totaled 1.1 and 16.3 million bushels respectively, another bearish combination for the week. Total wheat shipments are down 15% from a year ago with one more week remaining in the old-crop season. 10.0 million bushels of new-crop wheat were also sold last week. Technically, the trends are currently higher for all three wheats, but a more sideways path may be in store after prices failed to sustain recent tests above resistance. DTN's National SRW index closed at $4.99 Thursday, down from its highest price in ten months and 27 cents below the July contract.

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

Follow him on Twitter: www.twitter.com/ToddHultman1

(KR)

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Todd Hultman