DTN Closing Grain Comments

General Comments:

July corn closed down 1 1/2 cents per bushel and December corn was down 3/4 cent. July soybeans closed down 3 1/2 cents and November soybeans were down 2 1/2 cents. July KC wheat closed down 10 3/4 cents, July Chicago wheat was down 4 3/4 cents and July Minneapolis wheat was down 1/4 cent. The June U.S. dollar index is trading down 0.059 at 97.105. The Dow Jones Industrial Average is down 20.51 points at 25,807.85. June gold is up $2.10 at $1,287.30, July silver is up $0.02 at $14.79 and July copper is up $0.0055 at $2.7770. June crude oil is steady at $61.70, June heating oil is up $0.0045, June RBOB is up $0.0193 and June natural gas is up $0.030.

For the week:

July corn closed down 19 cents and December 2019 corn was down 15 3/4 cents. July soybeans were down 24 3/4 cents while November 2019 soybeans were down 33 cents. July Kansas City wheat was down 14 1/2 cents, July Chicago wheat was down 13 1/4 cents, and July Minneapolis wheat was up 2 cents.

Corn:

July corn ended down 1 1/2 cents at $3.51 3/4 Friday, a fairly mild reaction to USDA's highest ending stocks-to-use ratio estimate in 20 years. USDA raised the old-crop ending stocks estimate by 60 million bushels (mb) to 2.095 bb, largely due to a 50-mb reduction in ethanol demand. New-crop U.S. ending stocks were estimated at 2.485 billion bushels (bb) or 17% of annual use, still counting on 92.8 million acres of corn plantings. In South America, USDA increased its estimate of Brazil's corn crop from 96.0 mmt to 100.0 mmt (3.94 bb) and Argentina's corn crop from 47.0 mmt to 49.0 mmt (1.93 bb). USDA's world ending corn stocks for 2018-19 saw a big jump, from 314.0 mmt to 325.94 mmt (12.83 bb), largely due to larger crop estimates. For 2019-20, USDA estimated world ending corn stocks at a lower 314.71 mmt, but not much is known about that season yet. Fundamentally, Thursday's report was bearish for corn, but we still have a planting situation that is at risk of losing acres and possibly yield in 2019. Technically, cash corn prices are back at the low end of their 2019 trading range. There were 375 contracts open in May corn early Friday. DTN's National Corn Index closed at $3.28 Thursday, 25 cents below the July contract and down from its February high of $3.52. In outside markets, Dow Jones Industrials are down 21 points, recovering much of its earlier loss. Non-ag commodities were mixed to higher.

Soybeans:

July soybeans ended down 3 1/2 cents at $8.09 1/4, capping off the week with a 33-cent drop. As a possible acknowledgement that trade talks are not going well, USDA reduced its export estimate for 2018-19 and raised the estimate of U.S. ending stocks from 895 to 995 mb, the most on record. For the new 2019-20 season, U.S. ending stocks were estimated at a similar 970 mb, even while hanging on to a low planting estimate of 84.6 million acres. In South America, crop estimates didn't change much. The soybean crop estimate for Brazil stayed at 117.0 mmt (4.3 bb) and was increased for Argentina, from 55.0 mmt to 56.0 mmt (2.1 bb). USDA's estimate of world ending soybean stocks was increased from 107.36 mmt to 113.18 mmt (4.16 bb), boosted by a 2-mmt reduction in the estimate of soybeans China will import. The drop from 88.0 mmt to 86.0 mmt (3.16 bb) is related to concerns about lower feed demand due to African swine fever. For 2019-20, USDA expects world ending stocks to be similar, at 113.09 mmt (4.16 bb). Thursday's larger-than-expected estimate of U.S. ending stocks was bearish for soybean prices and traders also noticed U.S.-China trade talks ended without any announcement. Technically, the trend in cash soybeans remains down. May soybean contracts are slowly dwindling away, now showing 708 contracts open as of early Friday. DTN's National Soybean Index closed at $7.28 Thursday, at its lowest prices in seven months and priced $0.85 below the July futures contract.

Wheat:

After a week of roughly steady trading, July KC wheat fell 10 3/4 cents Friday to a new contract low of $3.87 a bushel. As you can probably imagine, USDA had nothing in Friday's report for wheat to feel bullish about. USDA increased its estimate of U.S. ending wheat stocks from 1.087 bb to 1.127 bb for 2018-19, the most in three years. Not surprising, the export estimate was reduced from 945 mb to 925 mb, as wheat shipments have not been keeping pace with USDA's estimate. For 2019-20, U.S. ending wheat stocks were estimated at 1.141 bb or 56% of annual use and not much of a change from the current season. Even though wheat plantings are at their lowest in over a century, all wheat production is estimated at 1.897 bb, similar to a year ago. Winter wheat production was estimated at 1.27 bb, up 103 mb from a year ago. The genuinely tough hurdle for wheat prices in the year ahead is USDA's ending stocks estimate of 293.01 mmt (10.77 bb), which is up from 274.98 mmt (10.10 bb) in 2018-19. Virtually every major wheat region is expecting higher production in 2019. Friday's report was bearish for wheat prices and is going to be difficult to overcome without some surprise in 2019. Technically, the trends for all three cash wheat prices remain down. Prices are low enough to find long-term support, but there is not much evidence yet. DTN's National HRW Index closed at $3.82 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 $4.02 Thursday, up from its lowest prices in a year. Trading in May grain contracts expires on Tuesday, May 14.

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

FollowTodd on Twitter @ToddHultman1

(CZ)

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