DTN Early Word Grains
Grains Lower, USDA Says Crops Doing Okay
December corn was down 4 1/2 cents, November soybeans were down 5 cents, and September Kansas City (HRW) wheat was down 5 1/4 cents.
CME Globex Recap:Major stock markets are starting higher Tuesday with positive gains expected in Friday's report of second quarter U.S. GDP. Tuesday morning's commodity board is split in half with ag commodities trading lower and most non-ag commodities starting higher. Contributing to Tuesday's lower grain prices, USDA's crop ratings held roughly steady from a week ago.
OUTSIDE MARKETS:Previous closes on Monday showed the Dow Jones Industrial Average down 13.83 points at 25,044.29 and the S&P 500 up 5.15 points at 2,806.98 while the 10-year Treasury yield ended at 2.96%. Early Tuesday, DJIA futures were up 82 points. Asian markets are higher with Japan's Nikkei 225 up 113.49 (0.5%) and China's Shanghai Composite up 46.02 (1.6%). European markets are also higher with London's FTSE 100 up 63.45 points (0.8%), Germany's DAX up 181.51 points (1.4%), and France's CAC 40 up 52.67 points (1.0%). The euro was down .0008 and the U.S. dollar index was up 0.04 at 94.67. September 30-year T-Bonds were up 9/32nds while August gold was down $1.50 at $1,224.10 and September crude oil was up $0.35 at $68.24. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were down 0.8%.
| BULL | BEAR | ||
| 1) | Dry conditions in the southwestern Corn Belt plus Michigan are helping support row crop prices. | 1) | USDA's good-to-excellent crop ratings for row crops are still among the better ratings of the past five years. |
| 2) | Commercials remain net long soybeans, soybean oil, and Minneapolis wheat -- three commodities that have gotten cheap. | 2) | China's 25% tariff on U.S. soybeans. |
| 3) | A few dry weather concerns are helping U.S. winter wheat prices hold sideways, above their 2018 lows. | 3) | The Federal Reserve remains committed to gradual rate hikes, which is supporting a higher U.S. dollar. |
CORN December corn is down 4 1/2 cents early after USDA kept its good-to-excellent rating for corn at 72% late Monday, unchanged from last week. Corn development also remains ahead of its usual pace with 81% silking and 18% in the dough stage. The biggest problem areas continue to be in the southern Plains and Michigan with the only difference being that crops in Missouri rated a little higher than a week ago and crops in Michigan rated a little worse. Compared to the past five years, this crop ranks third best so far, suggesting another high national yield in 2018. Technically, the trend in December corn remains down. However, the July low near $3.50 is a good candidate for support as USDA is expecting lower world corn supplies in 2018-19.
SOYBEANS November soybeans are down 5 cents early Tuesday, receiving a one percentage point increase in USDA's good-to-excellent crop rating, to 70%. As with corn, crops in Missouri showed a little improvement while Michigan scored a little worse. Nebraska, Kansas, and Missouri are expecting moderate rains later this week while Michigan continues to miss out. For all but the most southern states, temperatures are expected to stay moderate and even turn cool by the weekend. Compared to the last five years, 70% good-to-excellent is very close to the two best years soybeans has seen, so a high national yield estimate on August 10 seems likely. If it pans out, a big U.S. soybean crop at harvest plus trade problems with China is a bearish combination that will likely keep November prices near their lowest levels in nine years. However, weather risk is still in play and a surprise is possible. For now, the trend in soybeans remains down with the seasonal low not due until early October.
WHEAT September K.C. wheat is down 5 1/4 cents early, backing down from its five-week high after USDA showed no serious problems in Monday's Crop Progress report. USDA said 80% of winter wheat is harvested, on its usual pace. The Kansas harvest is finished and has moved north with Nebraska 82% complete and South Dakota 47% complete. The spring wheat crop continues to do well with 96% headed and 79% rated good-to-excellent, still the most since 2010. Wheat's main concerns at the moment are dry weather in north-central Europe and eastern Australia. The western Canadian Prairie could also use more rain, but the seven-day forecast is mostly dry. As mentioned last week, the world's exportable supplies of wheat are expected to be lower in 2018-19, but still have excess in the U.S. and Europe to keep channels supplied. For now, the trends in winter wheat are sideways. The trend in Minneapolis wheat remains down, but commercial net longs suggest downside risk may be limited.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.28 | $0.02 | -$0.29 | Sep | $0.002 |
| Soybeans: | $7.88 | -$0.02 | -$0.60 | Aug | $0.003 |
| SRW Wheat: | $4.87 | -$0.02 | -$0.27 | Sep | $0.000 |
| HRW Wheat: | $4.95 | $0.02 | -$0.16 | Sep | $0.000 |
| HRS Wheat: | $5.30 | $0.05 | -$0.32 | Sep | -$0.018 |
Todd Hultman can be reached at todd.hultman@dtn.com
Todd can be followed throughout the day on Twitter @ToddHultman1
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