DTN Before The Bell Grains

Crop Prices Start Higher Early Tuesday

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

As bearish as Monday's news of retaliatory tariffs from China was, corn, soybeans and all three wheats are starting higher Tuesday, partly due to corn planting concerns that aren't going away easily. Dow Jones futures are also trading modestly higher, trimming Monday's larger loss.

Other Markets:

Dow Jones: Higher
U.S. Dollar Index: Higher
Gold: Lower
Crude Oil: Higher

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Corn:

July corn is up 8 1/2 cents early Tuesday, adding to Monday's reversal of prices after USDA said 30% of corn was planted as of May 12, the lowest progress since 28% in 2013 and 27% in 1993. Tuesday's weather map shows scattered showers around western Iowa and Oklahoma with a mostly dry forecast for the central U.S. the next few days. Rain returns in the back half of the seven-day forecast with heavy amounts expected in the northern states, from the Pacific Northwest to Wisconsin and in a north-south line from eastern Texas to Minnesota. Indiana and Ohio are expected to sneak by with lighter amounts, offering some relief to their high surplus moisture totals. Here on May 14, this is the week when a 43 percentage point gain in planting progress was seen in 2013, but that does not look likely in 2019, given the above forecast. Corn remains at risk of losing planted acres and possibly yield from this year's wet spring conditions. Technically speaking, Monday's outside bullish reversal comes at a time when cash corn prices were under pressure from heavy noncommercial selling and spot futures prices were near their lowest levels in over two years -- a possible sign of support. DTN's National Corn Index closed at $3.31 Monday, priced 25 cents below the July contract. In outside markets, Dow Jones futures and the June U.S. dollar index are modestly higher. Outside commodities are also mostly higher.

Soybeans:

July soybeans are up 15 3/4 cents early, likely running into some short-covering after USDA said 9% of soybeans were planted as of May 12, down from 32% a year ago and down from the five year average of 29%. Some progress was made in Nebraska and Iowa and that should continue the next few days, but the rest of planting is mostly in southern states. Soybeans have more time available to them than corn and may gain some corn acres, but there is also a chance soybean acres will be limited by prevented plantings, in general. The larger picture for soybeans however, remains heavily bearish as slow exports are at risk of putting old-crop ending stocks above 1 billion bushels and trade talks with China have come to a halt after both sides resumed tariff increases. According to all things we reasonably know, the outlook for soybean prices remains bearish. The trick is that the politics of the trade dispute are a big part of the future of U.S. soybean demand and that has potential to change quickly and unexpectedly. For that reason, this remains a difficult market to be confident about in either direction. Technically, both cash and future soybean prices are trending lower. DTN's National Soybean Index closed at $7.18 Monday, priced 84 cents below the July contract and near its lowest prices in twelve years. At 8 a.m. USDA reported 180,000 mt of soybeans sold to unknown destinations for delivery in 2018-2019.

Wheat:

July K.C. wheat is trading up 5 1/2 cents early, adding to Monday's gain even though USDA kept the good-to-excellent crop rating for winter wheat at a high 64%, the highest in nine years. Kansas wheat is doing well at 56% good-to-excellent and Montana stands out at 74% good-to-excellent. The trouble spots for winter wheat continue to be seen in Ohio, Michigan and Illinois where excess soil moisture remains a problem. USDA also said 42% of winter wheat was headed, in line with last year's development. For spring wheat, USDA said 45% of the crop was planted and 10% was emerged, down from a five-year average of 34% emerged. Planting progress has picked up in the Dakotas and Minnesota, but some U.S. spring wheat acres are still at risk of being lost in 2019, while Canada expects an increase. The seven-day forecast brings more rain to the northwestern and southwestern U.S. Plains, but only light amounts are expected for the eastern Midwest, mostly favorable for winter wheat. Technically, the trends in all three U.S. wheat prices are down, but also near multi-year lows where support is typically found and weekly stochastics deserve watching. DTN's National HRW index closed at $3.82 Monday, 15 cents under the July contract and up from its lowest prices in over a year. DTN's National SRW index closed at $4.09, also up from its lowest prices in over a year. May grain futures contracts expire early Tuesday.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman