DTN Closing Grain Comments

Soybeans, Meal Get a Bounce After Bearish Week

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

General Comments:

Corn closed up 1/4 cent in the July contract and was down 1/4 cent in the December. Soybeans closed up 14 cents in the July and up 14 3/4 cents in the November. Wheat closed down 2 1/2 cents in the September Chicago, down 4 1/2 cents in the September Kansas City, and down 3 3/4 cents in the September Minneapolis. The September U.S. dollar index is down 0.20 at 94.20. August gold is up $0.20 at $1,270.70 while July silver is up 11 cents and July copper is up 0.0115. The Dow Jones Industrial Average is up 178 points at 24,640. August crude oil is up $3.02 at $68.56. August heating oil is up $0.0473 while August RBOB gasoline is up $0.0502 and August natural gas is down $0.028.

For the week:

July corn closed down 4 cents and December was down 4 3/4 cents. July soybeans were down 11 cents while the November was down 14 1/4 cents. September Chicago wheat was down 9 1/4 cents, September Kansas City wheatwas down 28 3/4 cents, and September Minneapolis wheat was down 20 cents.

Corn:

July corn ended up 1/4 cent at $3.57 1/4 Friday, but was down 4 cents on the week as crop conditions remained generally favorable in spite of flooding problems around the Midwest. The National Weather Service issued a flood warning in a three-state area around northwestern Iowa. Of course, this is always difficult news for those afflicted by flooding to hear, but we have seen big harvests in prior years where areas of flooding occurred, making it difficult for traders to get too bullish on news of excess rain. We will continue to monitor the situation as more moderate to heavy rains are in the forecast for the next ten days for much of the Corn Belt. In Brazil, the satellite map remains dry, along with the seven-day forecast. Another crop reduction seems likely for Brazil's second crop in July's WASDE report. On the demand side, Thursday's weekly export sales report showed light corn sales of 6.5 million bushels last week. USDA did a little better for new-crop corn early Friday, announcing 5.2 million bushels (131,300 mt) of U.S. corn were sold to Mexico. Four million bushels of the sale were for 2018-19 and the rest was for the current season. In addition, 4.6 million bushels of U.S. new-crop corn were sold to Panama. Technically, the trend in corn remains down with crop conditions still regarded as generally favorable. DTN's National Corn Index closed at $3.28 Thursday, near its lowest price in four months and 29 cents below the July contract. In outside markets, Dow Jones reported OPEC agreed to increase production, many expect to add roughly 600,000 barrels per day of actual increase. August crude oil is up $3.02, seeing Friday's increase as less than feared while other factors, such as economic problems in Venezuela and possible sanctions on Iran are in play.

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Soybeans:

July soybeans closed up 14 cents at $8.94 1/2 Friday, escaping the week with just an 11-cent loss after Tuesday's panicked selling. This week's prices were pressured by the same old concerns of trade problems with China and favorable crop conditions early in 2018. As with corn, Tuesday's selling after the U.S. proposed another $200 billion of tariffs against China left behind a low of $8.41 1/2 in July soybeans that prices have stayed above since. The difference with corn, however, is that soybeans are directly affected by the trade dispute with China while corn is more of a bystander. As described above, the moisture level across the Midwest is generally favorable, but this week's flooding reports started to challenge that assessment and conditions need to be monitored as it is still early in the growing season. On the demand side, there are theoretically enough soybean sales to meet USDA's export target of 2.065 billion bushels for 2017-18. However, because the shipment pace is still down 8% from a year ago with two and a half months remaining, there is some doubt as to whether or not the target will be reached. Technically, the trends remain down for soybeans with bearish concerns outweighing possible bullish arguments, which are really hopes, either for adverse weather or a resolution with China. DTN's National Soybean Index closed at $8.19 Thursday, priced 61 cents below the July contract and at its lowest price in over two years.

Wheat:

September Chicago wheat closed down 2 1/2 cents and September K.C. wheat was down 4 1/2 cents at $5.05 1/2, posting a loss of 28 3/4 cents on the week. Winter wheat did have two days of higher prices this week with concerns that too much rain on SRW wheat crop areas is damaging wheat quality. The concerns are valid and there is still more rain in the seven-day forecast. In the larger picture, however, there is no significant threat yet to the notion that world wheat production will only be marginally lower in 2018-19 and wheat supplies are likely to stay high. Eastern Ukraine and southern Russia are still facing a dry forecast and parts of Australia are also dry, but wheat crops remain favorable in Europe. U.S. wheat shipments are also off to a slow start in the new season, slightly above half of last year's pace. The trends in all three wheats remain down, coinciding with similar seasonal influences that turn down after early July. There is a chance that September K.C. wheat could hold above support at the March low of $4.94 of Chicago wheat above its March low of $4.76, but the bullish arguments currently look weak. DTN's National SRW Index closed at $4.73 Thursday, up from its lowest price in over a month and 22 cents below the July contract. DTN's National HRW Index closed at $4.89, near its lowest price in a month.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman