DTN Closing Grain Comments

Winter Wheat Sneaks Higher Late on Quiet Friday

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

General Comments:

May corn closed up 1 cent per bushel and December corn was up 1/2 cent. May soybeans closed steady and November soybeans were down 1/2 cent. May KC wheat closed up 3 3/4 cents, May Chicago wheat was up 4 cents and May Minneapolis wheat was down 2 cents. The June U.S. dollar index is down 0.219 at 96.590. The Dow Jones Industrial Average is up 247.37 points at 26,390.42. June gold is up $1.20 at $1,294.50, May silver is up $0.08 at $14.95 and May copper is up $0.0550 at $2.9420. May crude oil is up $0.54 at $64.12, May heating oil is up $0.0082, May RBOB is up $0.0155 and May natural gas is down $0.003.

For the week:

May corn closed down 1 1/2 cents and December 2019 corn was down 1 cent. May soybeans were down 3 3/4 cents while November 2019 soybeans were down 5 cents. May Kansas City wheat was up 3 cents, May Chicago wheat was down 3 1/4 cents, and May Minneapolis wheat was up 8 3/4 cents.

Corn:

May corn ended up a penny at $3.61 Friday, finishing the week on a quiet note and 1 1/2 cents lower than last Friday. The elephant in the room that this week's corn traders ignored again is the uncooperative weather for planting. Granted, it is still early, but this week's heavy snow and ice, high winds, and power outages across the U.S Northern Plains make it difficult to believe tractors will be in the fields by mid-May, leaving a narrow window for corn planting in the Dakotas, Minnesota and Wisconsin. Of course, that is in addition to flooding around the Midwest and on that count, the seven-day forecast expects heavy rains throughout the southern and Eastern Corn Belt. Not to pile on, but the extended forecast calls for above-normal precipitation across most of the Corn Belt. Corn's more bearish concerns are from South America, where both Brazil and Argentina are expecting larger crops and USDA says will increase their exports by a total of 600 mb in 2018-19. Fundamentally, corn prices should trade similar ranges to the past four years. Technically, May corn is trading quietly near its contract low while cash corn prices chop sideways, above $3.30. DTN's National Corn Index closed at $3.37 Thursday, 23 cents below the May contract. In outside markets, the June U.S. dollar index is trading down 0.22, slowly recovering from a larger loss earlier possibly related to a large euro transaction. Other commodities are mostly higher.

Soybeans:

May soybeans were unchanged at $8.95 1/4 on a quiet Friday with low trade volume. For the week, May soybeans were down x cents, staying near the low end of the same sideways range seen the past five months. Like corn, soybean prices have not shown much reaction to this spring's adverse weather, but there is a risk more soybeans will be planted in areas too late for corn. It is tricky trying to out-guess next month's weather, but as mentioned above, the outlook is mostly wet across the Midwest for at least the next ten days. In South America, Brazil's soybean harvest is nearing its final rounds and soybean exports are up. However, the International Grains Council said Brazil's soybean exports are expected to total 9.0 mmt in April (331 mb), down from 10.3 mmt a year ago as total exports are expected to be lower this season. Late Thursday, the Buenos Aires Grain Exchange said Argentina's soybean harvest is 17% complete. Fundamentally, the outlook for soybean prices remains bearish as long as China has a 25% tariff on U.S. soybeans. A new trade agreement, if it happened, would make the price outlook less bearish, but it will take time to work down the record surplus the U.S. has built in less than a year. Technically, it has been impressive that both cash and futures prices have been able to hold sideways for soybeans so far, but supply concerns remain bearish in the U.S. DTN's National Soybean Index closed at $8.11 Thursday, holding sideways and $0.84 below the May futures contract.

Wheat:

May KC wheat closed up 3 3/4 cents at $4.34 1/4 Friday, after playing possum until the final half hour of the session. While KC wheat is doing well to hold above its March low of $4.18 1/4, it is difficult for prices to trade much higher when U.S. supplies are so plentiful and USDA is rating 60% of the new winter wheat crop either good or excellent -- the highest in seven years. The SRW wheat crop in the southern and eastern Midwest could be in trouble, encountering wet conditions and facing a weekend of heavy rains. But May Chicago is already reflecting much of the concern with prices carrying an unusual 7% premium above May KC futures. Outside of the U.S., the western Canadian Prairies are dry, but other major wheat regions are mostly favorable with only minor concerns. Until a more substantial threat emerges, winter wheat prices are likely to keep trading quietly in the low $4s. For now, the trends for all three cash wheat prices are down. DTN's National HRW Index closed at $4.18 Thursday, up from its lowest price in over a year and down 13 cents from the May futures contract. DTN's National SRW Index closed at $4.36 Thursday, also up from its lowest price in over a year.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

(CZ)

Todd Hultman