DTN Closing Grain Comments

Soybeans Fall Lower After New Tariffs Announced

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

General Comments:

Corn closed down 1 3/4 cents in the July contract and was down 1 3/4 cents in the December. Soybeans closed down 21 3/4 cents in the July and down 19 1/2 cents in the November. Wheat closed down 2 cents in the July Chicago, down 2 1/2 cents in the July Kansas City and down 6 3/4 cents in the July Minneapolis.

The June U.S. dollar index is up 0.01 at 94.43. August gold is down $26.80 at $1,281.50 while July silver is down 73 cents and July copper is up 0.0785. The Dow Jones Industrial Average is down 194 points at 24,981. August crude oil is down $2.00 at $64.69. August heating oil is down $0.0724 while August RBOB gasoline is down $0.0660 and August natural gas is up $0.055.

For the week:

July corn closed down 16 1/2 cents and December was down 15 1/4 cents. July soybeans were down 63 3/4 cents and the November was down 59 1/4 cents. July Chicago wheat was down 20 1/2 cents, July Kansas City wheat was down 18 1/2 cents, and July Minneapolis wheat was down 21 1/2 cents.

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Corn:

July corn ended down 1 3/4 cents at $3.61 1/4 Friday, just below the old 2018 low of $3.62 and capping this week's loss at 16 1/2 cents. Crop conditions for row crops should still be in good shape Monday after a generous coverage of rain across much of the Midwest the past seven days, but there are some concerns moving forward with hot temperatures reaching into the western and central Corn Belt, starting Friday. The new seven-day forecast from the National Weather Service is expecting a broad coverage of moderate to heavy rain amounts, but DTN's rain forecast shows just moderate amounts, limited to the western and central Corn Belt. While July corn has dropped over 40 cents the past three weeks, there is a case still to make for finding support soon as pollination time is a few weeks away, and USDA is expecting another significant drop in world ending corn stocks in 2018-19. For now, the trends remain down for both old-crop and new-crop corn, which are under bearish stress while noncommercials are caught heavily long. However, December corn still has a chance to hold support at the old 2018 low near $3.80. DTN's National Corn Index closed at $3.33 Thursday, its lowest price in four months and 30 cents below the July contract. In outside markets, the Dow Jones Industrial Average is down 194 points, August gold is down $26.80 and August crude oil is down $2.00, pressured by Friday's tariff news, Wednesday's rate hike, and talk that Saudi Arabia and Russia are about to raise oil production.

Soybeans:

July soybeans closed dropped another 21 3/4 cents to $9.05 1/2 Friday, the lowest close in over two years after AP news reported President Trump approved roughly $50 billion of new tariffs against Chinese goods. AP also explained China's foreign ministry pledged to retaliate immediately, cancelling earlier plans to buy more U.S. goods. Soybean tariffs were not yet specified but are likely on the list of actions China is considering. With U.S. soybean crops doing well in early 2018 and noncommercials trying to liquidate losing long positions, Friday's news just added more bearish pressure on a market that was already lacking bullish arguments. Thanks to Brazil's record harvest in early 2018, China should be well supplied with soybeans through summer. Adverse summer weather is soybeans' only bullish hope at the moment, and there are not significant weather threats to report yet. Technically, the trends remain clearly lower for both old-crop and new-crop soybeans with new-crop futures spreads looking bearish. DTN's National Soybean Index closed at $8.64 Thursday, priced 63 cents below the July contract and at its lowest price in 10 months.

Wheat:

July Chicago wheat closed down 2 cents and July Kansas City wheat was down 2 1/2 cents at $5.19 3/4 Friday, both ending lower on the week after enjoying a decent, but brief rally Tuesday. Friday's most notable news for wheat came from Canada after genetically modified wheat was discovered in Alberta. The forbidden wheat appears to be an isolated case, but Japan said Friday it would not buy Canadian wheat until it can confirm that genetically modified wheat is not in Canada's shipments. Other importing nations are likely to follow Japan's lead. Otherwise, the U.S. winter wheat harvest continues with a hot weekend expected in the southwestern and central Plains. Wheat in southern Russia is still dry, but Ukraine had beneficial rains this week, limiting concerns about this year's world crops. Technically, winter wheat prices remain in uptrends, but are close to support and weekly stochastics are showing bearish momentum changes. The seasonal highs for winter wheat prices typically arrive around early July, making this a suspicious time for wheats' uptrends. DTN's National SRW index closed at $4.78 Thursday, down from its highest price in 10 months and 24 cents below the July contract. DTN's National HRW index closed at $5.12, down from 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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Todd Hultman