DTN Closing Grain Comments

Soybeans Take a Turn Sliding to New Lows

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

General Comments:

July corn closed down 3 1/4 cents per bushel and December corn was down 2 3/4 cents. July soybeans closed down 15 1/4 cents and November soybeans were down 13 1/2 cents. July KC wheat closed up 2 3/4 cents, July Chicago wheat was up 3 1/4 cents and July Minneapolis wheat was up 1 1/2 cents. The June U.S. dollar index is trading up 0.375 at 97.330. The Dow Jones Industrial Average is up 135.62 points at 26,646.67. June gold is down $4.50 at $1,273.10, May silver is down $0.20 at $14.78 and May copper is down $0.0080 at $2.8935. June crude oil is up $0.71 at $66.26, June heating oil is up $0.0111, June RBOB is up $0.0053 and May natural gas is down $0.070.

Corn:

July corn slid to another new contract low Tuesday, losing 3 1/4 cents to $3.60 1/4 as noncommercials continue to add to short positions in early 2019. We have seen these big, bearish bets early in the season before and they typically have not worked out well for speculators, but that doesn't seem to be slowing them down from doing it again in 2019. Late Monday, USDA said 6% of the U.S. corn crop was planted, down from the five-year average of 12% for this time of year. The weather has been more conducive for planting activity lately with lighter rain amounts in the central Midwest. The northern Midwest remains a problem with moderate showers expected to start Saturday and above-normal precipitation looming in the 6- to 10- day forecast for most of the Corn Belt. Fundamentally, we have a lot to learn yet about the 2019 corn crop, starting with how much will be planted and the early outlook for prices is in line with what corn has experienced the past four years. Technically, corn futures are sagging lower, having endured heavy selling from the speculator crowd. Cash prices are holding near their March low, firmer than the futures contracts. DTN's National Corn Index closed at $3.34 Monday, 21 cents below the May contract and near its lowest prices in four months. In outside markets, the June U.S. dollar index is up 0.37, pushing a new contract high, which is also adding to grains' bearish stress.

Soybeans:

July soybeans fell 15 1/4 cents to $8.75 1/2 Tuesday, falling to new seven-month lows for both the July and November contracts. As with corn and wheat, a combination of heavy noncommercial selling and reluctant buyers is behind Tuesday's lower soybean prices. In the meantime, trade talks with China continue unresolved and old-crop soybeans are facing record ending stocks of 895 million bushels or possibly more. Late Monday, USDA said 1% of soybeans were planted, mainly in southern states. Given the heavy rains in the southeastern states the past seven days, early progress may go slower than usual, but there is still time. Also on Monday, Dow Jones quoted the private consultant AgRural as saying 92% of Brazil's soybeans were harvested, closer to their final laps. Brazil's FOB soybean prices at $9.06 a bushel are a dime cheaper than those at New Orleans and continue to be the better buy for Chinese buyers, even if the tariff was gone. With no trade agreement in sight, noncommercials are staying on the short side of the soybean market. Technically, the trend in May soybeans turned down with last Wednesday's lower close. DTN's National Soybean Index closed at $7.95 Monday, 82 cents below the May contract and at its lowest prices in three months.

Wheat:

Wheat prices got a break from recent selling as July Kansas City wheat finished up 2 3/4 cents at $4.21 Tuesday. As suspected, USDA's good-to-excellent ratings for winter wheat increased from 60% to 62% Monday. Montana stood out with 88% of crops said to be either good or excellent. Kansas is doing well with 57% of crops making grade, while excess moisture is still a problem in Ohio and Michigan. USDA said 9% of the winter wheat was headed, down from the five-year average of 18%. Spring wheat planting remains slow at 5% complete versus a five-year average of 22%. There is no planting progress reported yet in North Dakota or Minnesota and only 2% of South Dakota's crop is in. Rain fell Tuesday in and around Oklahoma and eastern Kansas, favorable for HRW wheat with more expected the next few days. Early in 2019, dryness remains a concern in Australia and Alberta, but reported problems elsewhere are minor in most major wheat regions so far. 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 $3.99 Monday, 12 cents below the May contract as prices continue to search for support. DTN's National SRW Index closed at $4.12, its lowest price in over a year.

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

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(CZ)

Todd Hultman