DTN Closing Grain Comments

General Comments:

July corn closed up 1/4 cent per bushel and December corn was up 3/4 cent. July soybeans closed down 1 cent and November soybeans were down 3/4 cent. July Kansas City wheat closed down 3 1/2 cents, July Chicago wheat was down 6 cents and July Minneapolis wheat was down 5 3/4 cents.

The June U.S. dollar index is trading down 0.296 at 97.290. The Dow Jones Industrial Average is up 214.45 points at 26,522.24. June gold is up $9.10 at $1,281.10, July silver is up $0.35 at $14.97 and July copper is up $0.0410 at $2.8205. June crude oil is up $0.26 at $62.07, June heating oil is down $0.0036, June RBOB is up $0.0151 and June natural gas is down $0.013.

For the week:

July corn closed up 9 1/2 cents and December 2019 corn was up 7 cents. July soybeans were down 24 3/4 cents while November 2019 soybeans were down 23 1/2 cents. July KC wheat was down 6 cents, July Chicago wheat was down 4 1/2 cents, and July Minneapolis wheat was up 3 1/4 cents.

Corn:

July corn ended up a quarter-cent Friday at $3.70 3/4, a quiet day of trading to finish out the week with a 9 1/2 cent gain. The corn market could see some volatility on Sunday evening or Monday morning as traders will be examining any changes in forecasts over the weekend. As it currently stands, the seven-day forecast has heavy rain amounts over all, but the northwestern part of the Corn Belt, adding to planting delays and closing St. Louis to river traffic due to flooding. Flooding has also forced the CME Group to declare a force majeure at shipping stations along the Ohio and Mississippi Rivers. Meanwhile, the extended forecast expects more precipitation in the southern Corn Belt and below normal temperatures in the central and Western Corn Belt. Given current conditions, corn planting remains at risk of losing acres and possibly yield in 2019, depending largely on how the weather plays out the next two weeks. USDA will release new-crop estimates next Friday, May 10, but current planting problems probably won't yet be factored in. A U.S. ending stocks estimate of 2.0 billion bushels or more wouldn't be a surprise for 2019-20. Fundamentally, the outlook for corn prices remains neutral in early 2019 with a potentially bullish planting situation developing. Technically, cash corn prices have rebounded from their four-month low and are trending sideways once again. There were 2,313 contracts of May corn open early on Friday, a thinner trading environment. DTN's National Corn Index closed at $3.45 Thursday, 26 cents below the July contract and down from its February high of $3.52. In outside markets, Dow Jones Industrials are up 214 points after the Labor Department said nonfarm payrolls increased by 263,000 in April, more than expected. The U.S. unemployment rate improved from 3.8% to 3.6% in April. Surprisingly, the June U.S. dollar index is down 0.30.

Soybeans:

July soybeans finished out a bearish week down a penny on Friday. The final close of $8.42 1/4 was down 24 3/4 cents from a week ago as the buy side of the market has retreated in the face of noncommercial selling and an anticipation of record ending soybean supplies in 2018-19. This season's export loss of 250 million bushels (mb) is at risk of becoming 350 mb if the U.S. and China don't work out some kind of a deal soon. Earlier Friday, USDA did report 10.8 mb (293,922 mt) of U.S. soybeans sold to Mexico, but it was for 2019-20. The common wisdom is that if corn plantings are late, more soybeans will be planted, but it is difficult to calculate yet as widespread weather issues also increase the risk of prevented plantings that won't go to either corn or soybeans. USDA's new-crop estimates on May 10 will likely set an early tone for how soybean prices are viewed, but I can't over-emphasize the level of uncertainty this early in the season, both from trade and weather. Aside from the unknowns, we have to say the outlook for soybean prices remains bearish with record U.S. supplies and more large crops to compete against from down South. Technically, the trend in cash soybeans remains down. Trading is light in May soybeans, showing 3,532 contracts open early Friday. DTN's National Soybean Index closed at $7.57 Thursday, near its lowest prices in five months and priced $0.86 below the July futures contract.

Wheat:

July KC wheat ended down 3 1/2 cents, delivering a closing price of $4.01 1/2 on Friday and 6-cent loss on the week. I hate to say that two up days in a row is too good to be true for wheat, but there is a certain cynical truth to it as the fundamental outlook is leaving little room to be bullish on prices in 2019. That is not to say surprises don't happen, but what we do know is that USDA's May 10 WASDE report is apt to show over a billion bushels of old-crop wheat carried into the new 2019-20 season and an early outlook for a larger world wheat crop in 2019. This week's Wheat Quality Council Wheat Tour estimated a higher yield of 47 bushels an acre around Kansas, but also saw signs of input neglect as farm budgets are feeling the pinch see "Discouraging Times for US Wheat Producers" in Friday's DTN). Friday's weather map showed rain in Oklahoma and Kansas with heavier amounts on the way to the southwestern U.S. Plains the next seven days. The eastern Midwest is where the more problematic conditions are in 2019, and that area also has more unwelcome rain on the way. Spring wheat planting remains difficult in the Dakotas and Minnesota where 4-inch midday soil temperatures are still in the 40s. Technically, the trends for all three cash wheat prices remain down. With commercials net long in all three wheats and spot KC wheat prices dipping below their 2017 low, prices are low enough to find support, but there is not much evidence yet. DTN's National HRW index closed at $3.89 Thursday, down 16 cents from the July futures contract and near its lowest price in over a year. DTN's National SRW index closed at $4.16 Thursday, up from its lowest prices in a year. Trading in May wheat contracts is already dangerously thin with contract expirations set for May 14.

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

FollowTodd on Twitter @ToddHultman1

(CZ)

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