DTN Early Word Grains

Grains Mixed on Quieter Tuesday

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

December corn was up 1/4 cent, November soybeans were up 2 cents, and September Kansas City (HRW) wheat was down 3 1/4 cents.

CME Globex Recap:

Global stock markets are steady to higher overnight and most commodities are mixed after Monday's risk-off performance by investors. China's Shanghai Composite is down a half-percent, perhaps experiencing its own strain from the trade dispute with the U.S. Crude oil is quiet, but gold continues to fall to new lows in 2018.

OUTSIDE MARKETS:

Previous closes on Monday saw the Dow Jones Industrial Average drop 328.09 points to 24,252.80 while the S&P 500 was fell 37.81 points to 2,717.07 and the 10-year Treasury yield ended at 2.87%. Early Tuesday, DJIA futures were down 35 points. Asian markets were mixed with Japan's Nikkei 225 up 3.85 points (0.02%) and China's Shanghai Composite down 14.83 (-0.5%). European markets were modestly higher with London's FTSE 100 up 38.72 points (0.5%), Germany's DAX up 42.07 points (0.3%), and France's CAC 40 up 22.25 points (0.4%). The euro was down 0.0043 and the U.S. dollar index was up 0.26 at 94.55. September 30-year T-Bonds were down 5/32nds while August gold was down $10.50 at $1,258.40 and August crude oil was up $0.15 at $68.23. Soybeans on China's Dalian Exchange were steady to higher and Malaysian palm oil futures were down 0.6%.

BULL BEAR
1) So far, December corn remains above last Tuesday's low, supported by USDA's lower estimate of world ending corn stocks. 1) Flooding reports aside, Monday's U.S. crop ratings stayed high for row crops and spring wheat.
2) Even if the odds seem slim, there is a chance for adverse weather later this summer. 2) The growing trade war between the U.S. and the rest of the world is keeping investors cautious in a widening circle of markets, other than just soybeans and pork.
3) So far, September Chicago wheat is holding above its three-month low. 3) The trends remain lower for all three wheats, in line withtypical seasonal patterns.

MORE COMMODITY-SPECIFIC COMMENTS

CORN December corn is up a quarter-cent early Tuesday after USDA gave corn crops another high rating. Late Monday, USDA lowered the good-to-excellent rating for corn from 78% to 77%, but that is still the highest since 1999 when the good-to-excellent rating was also 77%. The top two trouble states for corn are Texas and Missouri, showing poor-to-very poor ratings of 25% and 16% respectively. Of course, those general ratings don't mean corn is doing well everywhere else as more local areas of flooding are being seen on Twitter after more overnight rain fell across the central Midwest. Judging by the seven-day forecast, more moderate to heavy rain amounts are likely to add to flooding problems around northern Iowa, southern Minnesota, Wisconsin, and northern Illinois. Temperatures will get hotter later this week with the 90s reaching most of the Corn Belt on Friday. Technically, the trend in corn is still down with crop conditions seen as generally favorable.

SOYBEANS November soybeans are up 2 cents early, staying quiet near its lowest November prices in over two years while investors wonder what the next steps in the escalating trade war will be. Late Monday, USDA said soybeans' good-to-excellent rating stayed at 73%, which is the highest in over 20 years, but also close to the 72% seen in 2016. As with corn, Missouri showed some problems with 15% of soybean crops rated poor-to-very poor. Of course, soybean crops are dealing with the same flooding conditions described for corn above, but overall, crop conditions are considered generally favorable, so far. Currently, soybeans' bearish problems are coming mainly from good weather and political decisions, two things that could change without much warning. The potential for increased volatility in a situation like this is high in either direction, but for now, the trend in soybeans is clearly down with plenty of uncertainty ahead this summer.

WHEAT September K.C. wheat is down 3 1/4 cents, trading at its lowest prices in five months as traders appear to be giving up on earlier bullish hopes. Late Monday, USDA said U.S. winter wheat was 41% harvested, above the five-year average of 33%. The Kansas harvest was 52% complete, well ahead of its usual pace. USDA also said 77% of spring wheat crops were rated good-to-excellent, the highest since 2012 when crops showed the same rating. Idaho and South Dakota both showed 10% of crops rated poor-to-very poor and no other state showed worse. This week's rain forecast includes the Dakotas, which is helpful to spring crops, but not the SRW wheat areas where more rain is adding to quality concerns at harvest. Outside of North America, southern Russia remains this year's drier spot, while most other wheat regions appear to be doing well. With problem spots limited, world wheat production is likely to be only down a little from last year, leaving the trends in all three wheats down.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.23 -$0.06 -$0.28 Jul $0.004
Soybeans: $8.14 -$0.19 -$0.61 Jul $0.005
SRW Wheat: $4.55 -$0.15 -$0.22 Jul -$0.005
HRW Wheat: $4.66 -$0.19 -$0.03 Jul $0.003
HRS Wheat: $5.26 -$0.09 -$0.14 Jul $0.000

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

Todd can be followed throughout the day on Twitter @ToddHultman1

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Todd Hultman