DTN Closing Grain Comments

Soybeans, Wheat Fall Lower

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was down 1 1/2 cents in the July contract and down 1 1/4 cents in the December. Soybeans were down 18 cents in the July contract and down 15 3/4 cents in the November. Wheat closed down 18 cents in the July Chicago contract, down 14 1/2 cents in the July Kansas City, and down 8 cents in the July Minneapolis contract. The June U.S. dollar index is up 0.16 at 93.98. August gold is down $2.40 at $1,297.00 while July silver is down 4 cents and July copper is down $0.0080. The Dow Jones Industrial Average is down 75 points at 25,247. July crude oil is up $0.23 at $66.59. July heating oil is up $0.0203 while July RBOB gasoline is up $0.0339 and July natural gas is up $0.024.

Corn:

July corn closed down 1 1/2 cents Wednesday at $3.76, still near its lowest prices in three months after Tuesday's 10 1/4 cent boost from USDA's lower estimate of world ending corn stocks. USDA's 2-mmt drop in Brazil's crop estimate was no surprise as the seven-day forecast continues to look dry, but a 4 mmt drop from Russia's crop estimate was a surprise and helped put the 2018-19 ending world stocks estimate at 154.69 mmt (6.1 bb), down 20% from the previous season. Here in the U.S., USDA estimated ending corn stocks at 1.58 billion bushels in 2018-19, but there is plenty of uncertainty this early in the season and USDA's 14.0 billion bushel crop estimate seem low. Fundamentally, the outlook for corn prices is neutral with plenty yet to learn in the new season. Technically, the trends remain down for both, old-crop and new-crop corn, under bearish stress while noncommercials are caught heavily long. DTN's National Corn Index closed at $3.46 Tuesday, down sharply from its highest price in 23 months and 31 cents below the July contract. In outside markets, the June U.S. dollar index is up 0.16 after the Federal Reserve increased the federal funds rate by a quarter-percent, as expected. Earlier, the U.S. Labor Department said producer prices were up 3.1% in May from a year ago, higher than expected.

Soybeans:

July soybeans dropped 18 cents to $9.36 Wednesday, its lowest close in nearly a year, pressured by several ongoing bearish concerns. U.S. crop conditions have started off favorably for row crops and DTN's seven-day forecast expects moderate showers in the Northern Plains, but lighter amounts elsewhere. Temperatures are expected to reach into the 90s as far north as southern Minnesota on Friday and stay on the hot side next week. USDA's Grain Stocks and Acreage reports are also bearish concerns for soybeans as demand has been lower than expected earlier this year and good spring weather may have meant more soybeans were planted than USDA's 89.0 million acre estimate from March. USDA did say earlier Wednesday that 6.5 million bushels (177,000 mt) of U.S. soybeans were sold to unknown with 6.3 million bushels (172,000 mt) for 2018-19 and the remainder for the current season. Another bearish factor weighing on prices is the heavy amount of noncommercial net longs in CFTC's most recent report that now need to get out of positions that are costing them lots of money. Technically, the trends remain lower for both old-crop and new-crop soybeans. The once bullish inverse has disappeared from the Nov/Mar spread, indicating a bearish change in attitude among commercials. DTN's National Soybean Index closed at $8.90 Tuesday, priced 64 cents below the July contract and getting close to its lowest price in 2018.

Wheat:

July Chicago wheat closed down 18 cents and July K.C. wheat was down 14 1/2 cents at $5.39, nearly erasing Tuesday's big rally after USDA lowered Russia's wheat crop estimate by 3.5 mmt to 68.5 mmt (2.52 bb). As mentioned in Tuesday's comments, the whole of USDA's wheat estimates were actually bearish as the estimate of world ending wheat stocks in 2018-19 increased, from 264.33 to 266.26 mmt (9.78 bb). Also concerning is how USDA's estimate of U.S. wheat production increased slightly to 1.827 billion bushels, up a little from last year in spite of this year's drought in the southwestern U.S. Plains. However, we have to agree that outside of Kansas, Oklahoma, and Texas, both winter and spring wheat crops appear to be doing well. Western Ukraine and southern Russia remain the most recent concerns for wheat crops that need rain and so far, the forecast remains on the dry side. Crops in Europe on the other hand, are doing well. Technically, winter wheat prices remain in uptrends. The seasonal high for winter wheat prices typically arrives around early July, making this a suspicious time for wheats' uptrends. DTN's National SRW Index closed at $5.09 Tuesday, down from its highest price in ten months and 26 cents below the July contract. DTN's National HRW Index closed at $5.39, near its highest price in over two years.

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

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Todd Hultman