DTN Closing Grain Comments

Soybeans Turn Higher, Catch Shorts Off Guard

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

General Comments:

Corn closed up 8 cents in the September contract and was up 8 1/2 cents in the December. Soybeans closed up 38 1/4 cents in the August and were up 38 3/4 cents in the November. Wheat closed up 9 3/4 cents in the September Chicago, up 9 3/4 cents in the September Kansas City and was up 10 3/4 cents in the September Minneapolis.

The September U.S. dollar index is down 0.42 at 93.80. August gold is down $3.60 at $1,255.20, while September silver is down 4 cents and September copper is down 0.0095. The Dow Jones Industrial Average is up 136 points at 24,493. August crude oil is up $0.52 at $73.46. August heating oil is down $0.0111, while August RBOB gasoline is down $0.0212 and August natural gas is up $0.017.

For the week:

September corn closed up 3/4 cent and December was up 1 3/4 cents. August soybeans were up 14 cents, while the November was up 14 1/2 cents. September Chicago wheat was up 14 cents, September Kansas City wheat was up 24 1/2 cents and September Minneapolis wheat was up 21 1/2 cents.

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Corn:

December corn closed up 8 1/2 cents at $3.73, riding the coattails of Friday's unexpected soybean rally, which emerged in the aftermath of Friday's tariff news. As mentioned often, corn prices are not directly affected by trade war news, but have a tendency to be influenced by soybeans and are certainly affected by investor withdrawal when too much risk is perceived. Closer to home, the seven-day forecast leans more bullish for the Corn Belt with warmer temperatures and drier weather as more crops reach pollination. Overall, however, temperatures are not expected to get dangerously hot for most of the Corn Belt -- at least yet. On the demand side, USDA said last week's corn export sales and shipments totaled 17.3 million bushels and 59.6 million bushels respectively, a neutral to bearish combination that has total corn shipments down 5% from a year ago. Earlier USDA reported U.S. ethanol exports in May were down 24% from a year ago, but the five-month total is still up 29% from a year ago. So far, corn crop conditions remain high in spite of this year's flooding problems. Technically, the trend remains down for December corn while the June low of $3.60 is still a potential source of support. DTN's National Corn Index closed at $3.19 Thursday, up from a new 2018 low and 33 cents below the September contract. There were 259 delivery intentions for July corn early Friday. In outside markets, the September U.S. dollar index is down 0.42 after the U.S. Labor Department said non-farm payrolls increased 213,000 in June, more than was expected.

Soybeans:

November soybeans surged 38 3/4 cents higher to $8.94 1/2 Friday, finding a vacuum to fill after the U.S. and China each unleashed $34 billion of new tariffs on the market, including a 25% tariff in China for importing U.S. soybeans. Of course, the anticipation of these new tariffs has been a long time coming and November soybeans were down over $2.00 a bushel from their highs in May before Friday's announcements. Therefore, it looks like someone took advantage of the news release as a time to challenge the side of the market that was making easy money all through June and this week by being short soybeans. In the larger picture, commercials had turned net long, showing attractive value in recent prices, even in this situation. Soybeans are still a long way from having a bullish reason to expect significantly higher prices however, as crop conditions are still generally favorable in early July. Technically, the trend remains down for soybeans with recent hints of possible support from commercial net longs. December soybean oil ended up 0.43 cent Friday, helped by a little bullish news. USDA reported biodiesel exports up 60% in May from a year ago, thanks to large shipments to Canada. DTN's National Soybean Index closed at $7.79 Thursday, at its lowest price in over nine years and priced 60 cents below the August contract. Among July contracts, delivery intentions totaled 437 for soybeans, 921 for soybean oil, and still none for meal early Friday.

Wheat:

September Chicago wheat closed up 9 3/4 cents and September K.C. wheat was also up 9 3/4 cents to $5.13, trading on light volume, but possibly also getting help from Friday's higher row crop prices. Winter wheat prices overcame Monday's lower start to finish the week higher, helped by lower crop estimates coming from Europe as Germany has been dry. This year's list of wheat problems is longer than it was a few weeks ago, but probably only represents about a 3% reduction from last year's record high for world production. On Thursday, July 12, USDA will give its next WASDE report, and world totals will be watched as weather risk is still in play in 2018. Here in the U.S., the spring wheat crop will likely show a high crop rating again on Monday, but the Canadian Prairie could use more rain. In spite of this week's higher prices, the trends for all three wheat futures remain down while weather risk still in play. DTN's National SRW index closed at $4.80 Thursday, up from its lowest price in two months and 26 cents below the September contract. DTN's National HRW index closed at $4.80, up from its lowest price in two months. Friday's delivery intentions for July contracts totaled 43 for K.C. wheat, one for Chicago wheat and none for Minneapolis wheat. July Minneapolis wheat is down to its last six contracts.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman