DTN Closing Grain Comments

Corn, Wheat Slide to New Lows

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

General Comments:

May corn closed down 3 3/4 cents per bushel and December corn was down 3 3/4 cents. May soybeans closed down 3 1/2 cents and November soybeans were down 3 3/4 cents. July KC wheat closed down 7 1/2 cents, July Chicago wheat was down 6 1/2 cents and July Minneapolis wheat was down 11 1/2 cents. The June U.S. dollar index is trading down 0.211 at 96.940. The Dow Jones Industrial Average is down 36.74 points at 26,522.80. June gold is up $0.90 at $1,276.90, May silver is up $0.01 at $14.97 and May copper is down $0.0150 at $2.9050. May crude oil is up $1.68 at $65.68, May heating oil is up $0.0352, May RBOB is up $0.0574 and May natural gas is up $0.036.

Corn:

May corn slid to a new contract low Monday, losing 3 3/4 cents to $3.54 3/4 on relatively light volume. December corn also fell to a new contract low at $3.82 1/2. The weekend saw heavy rains in the southern and Eastern Corn Belt and scattered showers across the northern Midwest that lasted into Monday. Heavy rains are expected around central Texas and from Wisconsin into Ontario the next seven days. The rest of the Corn Belt should see some planting activity with only light rain amounts anticipated this week. Monday afternoon's Crop Progress report will likely show corn planting behind its usual pace again, but there is time for catching up in the southern and central Corn Belt where fields are dry enough. In southern Minnesota, 4-inch midday soil temperatures are in the 40s and planting remains a concern. Monday morning, USDA said 53.3 million bushels (mb) of corn were inspected for export, slightly more than the amount needed each week to reach USDA's export goal in 2018-19. Japan and Mexico were top destinations, which reminds us again how important it is to reach trade agreements. Even though markets were closed on Good Friday, the CFTC released its Commitments of Traders report. CFTC data showed commercials net long 94,462 contracts of corn as of April 16, the most in over a year. Managed futures funds added to their record bearish position and were holding 326,887 contracts net short. Fundamentally speaking, USDA's corn planting estimate of 92.8 million acres seems high, but even if it were close, ending supplies are not likely to be much different from where they have been the past three seasons. Technically, corn futures are sagging lower, while cash prices are holding relatively firm near their one-year average, having largely withstood heavy selling from the speculator crowd. DTN's National Corn Index closed at $3.37 Friday, priced 21 cents below the May contract. In outside markets, the June U.S. dollar index is down 0.21 and most other commodities are lower. May crude oil is up $1.68 per barrel after AP reported that starting in May, the Trump administration will remove sanction exemptions on countries buying oil from Iran, including China and India.

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Soybeans:

May soybeans traded lower most the day and finished down 3 1/2 cents at $8.77 Monday, near its lowest prices in over five months. The slow pace of U.S. exports in 2018-19 remains a bearish concern for soybean prices and Monday's inspections report was not much help. USDA said 14.0 mb of soybeans were inspected for export last week, well below the 37.5 mb needed each week to reach USDA's export goal of 1.875 bb by the end of August. While U.S. futures markets were closed Friday, USDA did report 105,000 mt of soybean meal sold to Colombia, 60,000 mt of which was for 2018-2019 and the rest for 2019-20. Friday's CFTC data showed commercial net longs in soybeans increased to 88,307 contracts as of April 16, showing persistent support for soybeans' lower prices, while only 42% of noncommercial positions are long, a sign of bearish sentiment among speculators. Fundamentally, the anticipation of record high ending soybean stocks in 2018-19 is weighing on prices, while a U.S. trade agreement with China remains out of reach and traders also face the uncertainty of a new season. Technically, the trend in May soybeans turned down with last Wednesday's lower close. DTN's National Soybean Index closed at $7.98 Friday, 83 cents below the May contract and near its lowest prices in three months.

Wheat:

For Kansas City wheat, the slide to new lows continues as the July contract fell 7 1/2 cents to $4.18 1/4 Monday. In spite of excessive rain in the SRW wheat areas, USDA's good-to-excellent crop ratings are likely to get another high score later Monday afternoon, near last week's 60%. Central Texas, Oklahoma and Arkansas are anticipating heavy rain this week, which should be mostly favorable for the HRW wheat crop. Kansas, the top winter wheat producer, is only expecting light amounts, while crops are currently doing well. The lack of U.S. wheat exports has been a bearish disappointment this season, but Monday's inspections report showed an increase in activity with destinations ranging from Egypt and Nigeria to Mexico to several locations around Asia. USDA said 29.8 mb of wheat were inspected for export last week, slightly more than the weekly requirement to reach USDA's export estimate by the end of May. Friday's CFTC data showed commercial net longs in KC wheat increased to 19,731 contracts as of April 16 as cash prices trade near $4.00, the lowest in over a year. Noncommercials are net short 32,767 contracts as of April 16, the most net shorts held since February 2016. July Minneapolis wheat fell 11 1/2 cents to $5.18 Monday, the lowest July price in over 2 1/2 years. Here in late April, noncommercial selling remains the dominant feature in the wheat market and the trends of all three cash wheat prices are down, searching for support. DTN's National HRW Index closed at $4.08 Friday, 12 cents under the May contract and holding above its March low. DTN's National SRW Index closed at $4.21, still up from its lowest prices in a year.

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

FollowTodd on Twitter @ToddHultman1

(CZ)

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Todd Hultman