DTN Closing Grain Comments

Grains Hold It Together, Earn Mostly Small Gains

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

General Comments:

July corn closed up 1 1/4 cents per bushel and December corn was up 1 1/4 cents. May soybeans closed up 4 cents and November soybeans were up 3 3/4 cents. July KC wheat ended steady, July Chicago wheat was up 3 cents and July Minneapolis wheat was up 2 cents.

The June U.S. dollar index is trading up 0.045 at 97.900. The Dow Jones Industrial Average is down 74.33 points at 26,522.72. June gold is down $0.10 at $1,279.30, May silver is down $0.03 at $14.89 and May copper is down $0.0495 at $2.8605. June crude oil is down $0.62 at $65.27, June heating oil is up $0.0011, June RBOB is up $0.0047 and June natural gas is up $0.045.

Corn:

July corn threatened another new contract low early Thursday, but ended up 1 1/4 cents at $3.57 1/4 on steady volume. Spot corn prices are near their lowest level since September as favorable crop conditions in South America have encouraged heavy noncommercial selling in 2019. USDA will have its next estimates for new-crop corn on May 10, but the International Grains Council (IGC) has already started on world corn estimates for 2019-20. IGC expects world corn stocks to drop from 311 million metric tons (mmt) in 2018-19 to 275 mmt (10.83 bb) in 2019-20, even though world production is expected to increase by 0.6%. Among the top four corn exporters, world ending corn stocks are expected to drop from 71 mmt to 67 mmt (2.64 bb) in 2019-20. Here in the U.S., the speculative side of the market is showing no signs of concern yet about its record net short positions and is winning the short-term tug of war. Corn planting likely made some progress this week in the central and western Corn Belts where fields are drier. Rain fell in southern Minnesota and northern Iowa Thursday morning with heavy amounts expected over much of the Corn Belt the next seven days -- even a chance of snow in Minnesota. Early Thursday, USDA said 30.7 million bushels (mb) of corn were sold last week, helped by the top buyers of Japan and Mexico. 49.2 mb of corn was shipped, a little above the amount needed each week to reach USDA's export estimate. Fundamentally, if the U.S. planting goes well, ending corn supplies should not be much different from the current season, which means prices would likely trade in a similar range as the past four years. Technically, corn futures are sagging lower, enduring heavy selling from the speculative crowd before much is known about the new season. Cash prices are holding firmer than futures contracts, but Wednesday's new four-month lower turns that trend down. DTN's National Corn Index closed at $3.27 Wednesday, priced 28 cents below the May contract and at its lowest prices in four months. In outside markets, the June U.S. dollar index is up 0.04 and Dow Jones Industrials are down 74 points ahead of Friday's report on U.S. GDP.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Soybeans:

July soybeans found enough support to end higher on Thursday, closing up 4 cents at $8.72 3/4. In the big picture, little has changed for soybeans lately, except this week's news that the U.S. is threatening to impose sanctions on China in May, if China buys oil from Iran. The news gave oil prices a modest boost but may have also contributed to this week's selling in soybeans as the threat makes it more difficult for the U.S. and China to reach a trade agreement anytime soon. In addition to competing with a larger crop in Argentina and a large crop in Brazil, there is also a risk that USDA's estimate of ending soybean supplies will have to be increased from 895 million bushels (mb) to possibly near 1 billion bushels (bb), if a trade agreement with China fails to materialize. Thursday morning's export figures from USDA gave no bullish encouragement. USDA said 21.9 mb of soybeans were sold last week and 14.6 mb were shipped, well below the 35.6 mb of shipments needed each week to make it to USDA's export estimate. Also early Thursday, IGC estimated world soybean production will be slightly lower in 2019-20 and so will ending soybean stocks at the top three exporters. With no certainty about a trade deal with China and record ending soybean supplies looming, soybean prices remain under bearish pressure. Technically, the trend in July soybeans turned down on April 17. DTN's National Soybean Index closed at $7.75 Wednesday, priced 80 cents below the May contract and at its lowest price in four months.

Wheat:

After reaching a new contract low Wednesday, July KC wheat waved a white flag Thursday and ended unchanged at $4.11 1/2 on steady volume. The eastern Midwest received more unwelcome rain on SRW wheat crops Thursday, but as we have seen from USDA, good-to-excellent crop ratings are at 62%, the highest in seven years. The seven-day forecast expects heavy rains from Oklahoma and eastern Kansas, across much of the Midwest and all the way to Maine and Ontario. On the western end, the moisture will be mostly helpful, but not in the eastern Midwest where surplus levels are already high. In Canada, Alberta is expected to get some much-needed rain in the week ahead, leaving Australia, eastern Ukraine and part of eastern Europe as the only dry weather concerns for wheat. On Thursday, IGC estimated a 3.7% increase in 2019-20 world wheat production, also expecting ending wheat stocks among the top eight exporters to increase from 68 mmt to 72 mmt (2.65 bb). Fundamentally speaking, 1.1 bb of old-crop carry in the U.S. is enough to discourage potential buyers and is keeping prices under bearish pressure. Technically, spot KC wheat is near its lowest prices in 13 years and should be close to finding support. DTN's National HRW index closed at $3.93 Wednesday, 12 cents below the May contract as prices continue to search for support. DTN's National SRW index closed at $4.09, at its lowest prices in over a year.

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

FollowTodd on Twitter @ToddHultman1

(CZ)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Todd Hultman