DTN Closing Grain Comments

Row Crops Grab Small Gain; KC Wheat Falls Back

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

General Comments:

May corn closed up 1 3/4 cents per bushel and December corn was up 1 3/4 cents. May soybeans closed up 3 1/2 cents and November soybeans were up 3 1/4 cents. May KC wheat closed down 7 cents, May Chicago wheat was down 5 cents and May Minneapolis wheat was up 1/2 cent. The June U.S. dollar index is trading down 0.043 at 96.555. The Dow Jones Industrial Average is down 24.46 points at 26,387.84. June gold is down $4.10 at $1,291.10, May silver is down $0.02 at $14.95 and May copper is down $0.0115 at $2.9345. May crude oil is down $0.52 at $63.37, May heating oil is down $0.0096, May RBOB is down $0.0217 and May natural gas is down $0.061.

Corn:

May corn closed up 1 3/4 cents at $3.62 3/4 Monday, finding support near its contract lows while planting conditions remain a concern in early 2019. After last week's winter storm dumped heavy snow from South Dakota to the Great Lakes, northern Illinois and Michigan got a dose of the white stuff Sunday. Rain fell over the weekend, from eastern Texas to New England, keeping fields wet, especially around the Mississippi Delta where amounts were heavy. Monday morning, USDA said 46.5 million bushels (mb) of corn were inspected for export last week, short of the 51.9 mb needed each week to reach USDA's export goal by the end of August. Total corn shipments still have a 14% lead over last year at this time, but lower sales commitments remain a bearish concern with large corn crops anticipated from Brazil and Argentina this year. The outlook for corn prices is similar to what we have seen the past four years, but with managed futures funds holding a record net-short position of 289,859 contracts, there is potential for a short-covering rally sometime this season. Cash corn prices are chopping sideways, near their one-year average at $3.38. DTN's National Corn Index closed at $3.38 Friday, 23 cents below the May contract. In outside markets, the June U.S. dollar index is down 0.04, while most commodities outside of grains were lower.

Soybeans:

May soybeans closed up 3 1/2 cents at $8.98 3/4 Monday, staying close to $9.00 while media reports continue to say U.S.-China trade talks are making progress toward a deal. According to the New York Times, U.S. Treasury Secretary Steven Mnuchin was quoted saying he was hopeful the U.S. and China are getting close to "the final round of concluding issues," an upbeat sentiment heard often since December. With soybeans, domestic crush has been the more supportive form of demand the past several months. According to several Twitter sources, the National Oilseed Processors Association said Monday that 170 mb of soybeans were crushed in March, more than expected with a 4% higher running total in 2018-19. Soybean oil stocks totaled 1.761 billion pounds at the end of March, a little less than expected and down 10% from a year ago. On the export side, USDA said 16.9 mb of soybeans were inspected for export last week, well below the 37.4 mb needed each week to reach USDA's export estimate for 2018-19. USDA also said 5.1 mb (140,000 mt) of U.S. soybeans were sold to unknown destinations for 2018-19. Fundamentally, the outlook for soybean prices remains bearish, but commercials continue to offer support to current prices and the uncertainty of how trade talks will go is still a big missing piece of the puzzle. Technically, both cash and futures soybean prices continue to trade sideways with cash soybeans holding above $8.00. DTN's National Soybean Index closed at $8.11 Friday, chopping sideways and priced 84 cents below the May contract.

Wheat:

May Kansas City wheat dropped 7 cents Monday to $4.27 1/4, pressured by the same familiar topics. For starters, USDA's weekly inspections report showed 18.6 mb of wheat inspected for export last week, well below the 30.5 mb needed each week to reach USDA's export estimate of 945 mb by the end of May. The way things are going, the U.S. will carry roughly 1.1 billion bushels of wheat into the new 2019-20 season, similar to the previous two years. Monday afternoon's Crop Progress report is also likely to show another week of high good-to-excellent ratings for U.S. winter wheat, pegged at 60% last Monday. It is too early to drive a stake in wheat prices for 2019-20, but if weather conditions remain mostly favorable, exporting wheat could be even more difficult next year as a larger world wheat crop is expected by the International Grains Council. Russia's ag consultancy, SovEcon, increased its estimate of Russia's wheat crop Monday, to 83.4 mmt (3.06 bb) in 2019, up from USDA's crop estimate of 71.7 mmt last year. Fundamentally, the price outlook for wheat remains bearish, but there is plenty of uncertainty yet about the new season ahead. With ample U.S. wheat available and early crop conditions looking mostly favorable, the trends in cash prices for all three wheats are down with prices probing for support. DTN's National HRW Index closed at $4.22 Wednesday, 13 cents under the May contract and up from its lowest prices in a year. DTN's National SRW Index closed at $4.40, also up from its lowest prices in a year.

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

FollowTodd on Twitter @ToddHultman1

(CZ)

Todd Hultman