DTN Closing Grain Comments

General Comments:

Corn was up 5 1/4 cents in the July contract and up 5 1/4 cents in the December. Soybeans were down 4 1/2 cents in the July contract and down 5 1/4 cents in the November. Wheat closed up 10 3/4 cents in the September Chicago contract, up 13 1/4 cents in the September Kansas City, and up 8 1/4 cents in the September Minneapolis contract. The September U.S. dollar index is down 0.41 at 94.36. August gold is up $12.70 at $1,254.30 while September silver is up 22 cents and September copper is down $0.0260. The Dow Jones Industrial Average is down 132 points at 24,175. August crude oil is up $0.02 at $73.96. August heating oil is up $0.0019 while August RBOB gasoline is down $0.0006 and August natural gas is up 0.018.

Corn:

December corn closed up 5 1/4 cents at $3.64 1/4 Tuesday, taking back part of Monday's 12 1/4 cent drop with help from light commercial buying on a day when many traders skipped town early. Late Monday, USDA said 17% of corn was silking and 76% of the crop was rated good to excellent, down one point from last week and very close to the successful crops of 2014 and 2016. Texas and Missouri are two states where poor ratings are high. The largest corn producing states sport high ratings, in spite of recent concerns of flooding in the northwestern Corn Belt. A large holding of bullish noncommercials remains a bearish risk to corn prices, but it is also likely that more were liquidated in Monday's selloff. Fundamentally, USDA's lower estimate of world ending corn stocks in 2018-19 suggests December corn prices should have support above the 2017 low of $3.35. For now, the trend remains down for corn while the June low of $3.60 is still a potential source of support. DTN's National Corn Index closed at $3.13 Monday, a new 2018 low and 34 cents below the September contract. There were 369 delivery intentions for July corn early Tuesday. In outside markets, the September U.S. dollar index is down 0.41, correcting back with encouragement from Tuesday's lower 10-year Treasury yield of 2.84%.

Soybeans:

November soybeans ended down 5 1/4 cents at $8.64 1/4 on light volume Tuesday. Soybean traders aren't so concerned about Wednesday's fireworks as they are about the fireworks that may take place on Friday when China is expected to enact its 25% tariff on U.S. soybeans. Not that the tariff itself will be a surprise, but the fact that it leads to another level of increased tariffs from the U.S. and adds more uncertainty as to where this whole trade dispute is headed. Even greater uncertainty is what makes investors cautious and we are seeing that in a wide variety of markets, which also include soybeans. If we were allowed the luxury of forgetting about the trade dispute, we would say there are reasons to believe that November soybeans below $9 offer attractive value to potential buyers, but as it is, trade problems with China remain a bearish risk to prices. Late Monday, USDA's good-to-excellent rating for soybeans dropped from 73% to 71%, still the highest since 2014. As with corn, the top-producing states are in good shape while Missouri shows 15% of the crop rated poor or very poor. Fundamentally speaking, China's ability to secure U.S. soybean purchases cheaply this fall will depend on this summer's weather and how the Chinese government treats Chinese importers during the tariffs. Technically, the trend remains down for soybeans with recent hints of possible support from commercial net longs. DTN's National Soybean Index closed at $7.91 Monday, at its lowest price in over nine years and priced 62 cents below the August contract. Among July contracts, delivery intentions totaled 692 for soybeans, 1,275 for soybean oil, and still none for meal early Tuesday.

Wheat:

September Chicago wheat closed up 10 3/4 cents and September K.C. wheat was up 13 1/4 cents at $4.84, bouncing back from Monday's lower closes and giving traders whiplash in the back and forth process. There are two bullish things we can currently say about wheat prices. The Jul/Sep Chicago wheat spread is close to a bullish inverse while July is in the delivery process and only one delivery intention has been made, so far. That is a sign of unexpected commercial demand for SRW, at least in the short-term. The second bullish clue is how France's wheat prices have traded higher recently -- a sign of crop problems now getting more attention. Parts of the Canadian Prairie could use more rain, southern Russia remains dry, and spring wheat conditions in Siberia has been too wet. All these problems are helping September Chicago wheat hold support above its three-month low at $4.80 while September K.C. wheat has already broken below its three-month low. For now, the trends for all three wheat futures remain down with weather risk still in play. DTN's National SRW index closed at $4.55 Monday, up from its lowest price in two months and 26 cents below the September contract. DTN's National HRW index closed at $4.50, at its lowest price in two months. Delivery intentions for July contracts totaled 152 for K.C. wheat and none for either Chicago or Minneapolis wheat.

After the July 4th holiday, U.S. grain futures will resume trading at 8:30 a.m. CDT on Thursday.

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

Follow Todd Hultman on Twitter @ToddHultman1

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