DTN Closing Grain Comments

USDA Interrupts Bearish Mood in Grains

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

General Comments:

Corn was up 4 1/2 cents in the September contract and up 4 1/2 cents in the December. Soybeans were up 10 cents in the August contract and up 9 1/2 cents in the November. Wheat closed up 9 1/4 cents in the September Chicago contract, up 6 1/4 cents in the September Kansas City, and up 5 cents in the September Minneapolis contract. The September U.S. dollar index is up 0.45 at 94.72. August gold is down $11.60 at $1,228.10 while September silver is down 19 cents and September copper is down $0.0145. The Dow Jones Industrial Average is up 41 points at 25,106. August crude oil is up $0.27 at $68.33. August heating oil is up $0.0259 while August RBOB gasoline is up $0.0202 and August natural gas is down 0.021.

Corn:

December corn closed up 4 1/2 cents at $3.59 3/4, up from its lowest prices in 2018 with help from USDA's lower crop rating on Monday. USDA said 63% of corn was silking and 72% of the crop was rated good to excellent, down from 75% a week ago with increased poor-to-very poor ratings in Texas, Missouri, Kansas, and Michigan. Even though lower, 72% good to excellent in mid-July is still better than three of the past five years -- all five of which had successful fall harvests. However, corn traders have not had much to be bullish about lately so it's not surprising to get some short-covering out of Monday's news. The other potentially bullish factor for corn is USDA's estimate of lower ending world corn stocks in 2018-19, but we still have a long way to go to prove those numbers out and so far, U.S. corn shipments in 2017-18 are down 4% from a year ago. For now, the trend remains down for December corn. DTN's National Corn Index closed at $3.16 Monday, near its lowest price in 2018 and 25 cents below the September contract. In outside markets, the September U.S. dollar index is up 0.45 after Federal Reserve Chairman Powell told the Senate he still supported gradual rate hikes in spite of trade policy concerns, reported RTTNews.com.

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Soybeans:

November soybeans closed up 9 1/2 cents at $8.55 1/4, also given a boost by USDA's lower crop rating on Monday. USDA said 65% of soybeans were blooming, 26% were setting pods, and 69% of crops were rated either good or excellent, down from 71% last week. As with corn, suspect areas include parts of Kansas, Missouri, and Michigan. Compared to the past five years, 69% good to excellent in mid-July is still a high rating, but much depends on weather at pod-setting time. Rain is expected to give Missouri some help the next few days, but heavy amounts are also on their way to northwestern Iowa and southern Minnesota where the higher totals are not needed. Monday's lower crop rating and this year's conflicting factors in different regions are challenging the previous bearish consensus and have given prices at least a short-term reprieve from their lowest levels in nine years. The trend remains down for soybeans with trade issues also an ongoing concern. DTN's National Soybean Index closed at $7.69 Monday, up from its lowest price in over nine years and priced 60 cents below the August contract.

Wheat:

September Chicago wheat jumped up 9 1/4 cents and September K.C. wheat was up 6 1/4 cents at $4.90 3/4, two modest bullish surprises helped by commercial buying and not related to USDA's latest Crop Progress report. Late Monday, USDA said 74% of winter wheat was harvested with Kansas within one percentage point of being finished. For spring wheat, USDA said 93% was headed and 80% was rated good to excellent, the highest such rating since 2010. Dry conditions were of some concern in South Dakota and Idaho. There is one subtle change to this year's world wheat market, which was described well by DTN Contributing Analyst Joel Karlin in Tuesday's "Fundamentally Speaking" blog. Karlin pointed out that while world wheat stocks-to-use ratios remain high, factoring out China shows the lowest ratios since 2012-13. Of course, the U.S. still has plenty of wheat available and represents the final obstacle to higher prices. For now, the trends for all three wheat futures remain down, but it is interesting how winter wheat prices are holding above their 2018 lows. DTN's National SRW index closed at $4.63 Monday, up from a new two-month low and 26 cents below the September contract. DTN's National HRW index closed at $4.70, also up from its lowest prices in two months.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman