DTN Before The Bell Grain Comments

Wheat Prices Lead Grains to Greener Start

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

Morning CME Globex Update:

Tuesday morning's higher prices for July contracts of corn, soybeans, and all three wheats will be recognized as "Turnaround Tuesday," but feels more like "Stop the Bleeding" Tuesday after prices endured heavy losses the past five sessions. U.S. row crop conditions continue to look favorable in early 2018.

Other Markets:

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

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Corn:

After falling over 25 cents in just over a week, July corn was up 3 cents Tuesday, finding support from early bargain-hunting while U.S. corn crops continue to show a good start in 2018. Late Monday, USDA said 97% of corn was planted, 86% was emerged, and 78% of the crop was rated good-to-excellent. DTN's Corn Condition Index of 188 is the highest score since 1994, which sounds bearish, but is still susceptible to change, depending on this summer's weather. For now, prospects are favorable with a broad coverage of moderate to locally heavy rain in the seven-day forecast for the Corn Belt. On the other side of the Pacific Ocean, row crops in north and central China are off to a dry start and are starting to experience hotter temperatures, which bear watching. The seven-day forecast for Brazil also remains dry. Technically, Monday's lower closes turned the trends down for both, old-crop and new-crop corn. DTN's National Corn Index closed at $3.49 Monday, down sharply 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 0.17 while most commodities other than grains are starting the day lower.

Soybeans:

July soybeans were up 2 cents in quiet trading early Tuesday, still holding above $10 and above support at the May low of $9.92 1/2 while soybean crops in the U.S. are also off to a good start. Late Monday, USDA said 87% of soybeans were planted, 68% were emerged, and 75% of soybean crops were rated either good or excellent. DTN's Soybean Condition Index started the new season at 180 which ties the highest score since 2010. As with corn, these early crop ratings don't say much about yield at harvest and it is good to keep in mind that 2010 turned out to be a bullish year for soybean prices. For now, rain in the seven-day forecast should help keep crop concerns low. It is interesting that, like corn, noncommercials are also bullish in soybeans, but soybean prices have not suffered the same technical damage that corn has the past week. So far, the sideways trend in Nov soybeans is holding firm, but new-crop spreads show a weakening of bullish inverses. The trend in July soybeans is also sideways, but trading near support as demand for old-crop soybeans remains a bearish concern. DTN's National Soybean Index closed at $9.36 Monday, priced 65 cents below the July contract and staying well below major resistance at $10.00.

Wheat:

July Chicago wheat was up 9 cents and July K.C. wheat was up 9 3/4 cents, taking back part of Monday's losses early as wheat prices continue their zig-zag pattern of the past two months. On one hand, U.S. winter wheat is suffering obvious production problems in the southwestern Plains and that region remains dry. On the other hand, the world's other wheat regions do have some concerns, such as dry weather in southern and western Australia, but appear to be favorable for crops overall, so far. It is still early enough in the year to keep traders cautious. Late Monday, USDA said 83% of winter wheat was headed and 5% was harvested, mostly from Texas. DTN's Winter Wheat Condition Index at 61 remains the lowest since 2014. For spring wheat, USDA said 97% was planted, 81% was emerged, and 70% of the crop was rated good-to-excellent, a favorable start that should get more help from moderate rain in the seven-day forecast. Technically, the trends are still higher for all three wheats, but the charts are not looking so bullish after prices failed to sustain recent tests above resistance. DTN's National SRW index closed at $4.80 Monday, down from its highest price in ten months and 25 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