DTN Closing Grain Comments

General Comments:

July corn closed up 9 1/2 cents per bushel and December corn was up 7 3/4 cents. July soybeans closed up 4 1/4 cents and November soybeans were up 5 cents. July KC wheat closed up 14 3/4 cents, July Chicago wheat was up 18 1/4 cents and July Minneapolis wheat was up 11 1/4 cents. The June U.S. dollar index is trading up 0.274 at 97.650. The Dow Jones Industrial Average is up 249.07 points at 25,897.09. June gold is down $11.40 at $1,286.40, July silver is down $0.29 at $14.53 and July copper is up $0.0035 at $2.7465. June crude oil is up $0.89 at $62.91, June heating oil is up $0.0377, June RBOB is up $0.0481 and June natural gas is up $0.039.

Corn:

Corn futures have vaulted higher again and closed near Wednesday's high of $3.80. After a few more days of warm and mostly dry weather for many planting areas, the forecast beginning this weekend turns very wet. Rain totals amounting to 3 to 5 inches or more are expected to be widespread, heating up trade talk of reduced corn and spring wheat acres. The focus has recently turned away from the U.S.-China trade talks, which have reached an impasse, to weather and production potential. Even though there is certainly a big cushion of stocks both in the U.S. and world to counter losses, an extension of the wet weather pattern into June, which NOAA sees, could have serious implications for the U.S. corn and soybean balance sheets, with some private analysts even speculating on a record prevent plant acreage number on corn of as much as four million bushels. The jury is still out and yield will ultimately be more impacted by growing weather than planting date, and NOAA has projected June-July-August weather to be beneficially cool and wet for much of the corn belt. Managed money funds have been buying and are now thought to have whittled down their net short to a still formidable 260 to 270,000 contracts. July corn is approaching an area of strong resistance at $3.80 to $3.85, while December is just shy of a major sell area of $4.00 to $4.05. Export sales for the week ended May 9 were 21.8 million bushels (mb) and total commitments, at 1.846 billion bushels (bb), are now 11% lower than a year ago, while shipments are up 8%. On the good news front, there are indications from Treasury Secretary Steve Mnuchin that tariffs on aluminum and steel could soon be lifted against Canada and Mexico, opening the door for the USMCA trade pact to be signed. DTN National Corn Index closed at $3.44 Wednesday, priced 25 cents below the July contract. In outside markets, the Dow Jones average is surging at up 265 points, with crude oil up 88 cents per barrel, and the U.S. dollar index is up .2720.

Soybeans:

Soybeans are obviously most impacted by the 10-month old U.S.-China trade tensions, and, unlike corn and wheat, July soybeans remain below the 20-day moving average. Recent fund short-covering this week has rallied July and November beans 50 cents above the new lows. Funds remained short an estimated 165,000 contracts of beans coming in Thursday. While most had assumed that the next meeting on trade would take place at late June's G20 summit in Japan, Mnuchin implied that he would soon be heading to Beijing again. U.S. Ag Secretary Sonny Perdue has assured U.S. farmers, with a priority on soybean and hog farmers, that an aid package that could amount to $15 to $20 billion is in the works, with an order to expedite that from President Trump. The package will be in the form of direct payments. In the meantime, Brazil's soybean basis has been screaming higher amid rumors that China may have bought as many as 40 to 50 cargoes of Brazilian beans in the past few weeks. The good news is that U.S. soybeans are now the cheapest option on a FOB basis to most destinations excluding China, where tariffs are in place. Even with Brazil rumored to have picked up new China business this week, Brazil's soybean exports to China for the first four months are down 13% versus a year ago, at 20 million metric tons (mmt), according to the shipping agency Cargonave. U.S. Soybean export sales for the week ended May 9 were a meager 13.6 mb and total commitments are now 18% lower than a year ago, with shipments lagging by 27%. U.S. soybean shipments are down 411 mb compared to USDA's projection of a 354 mb shortfall. While U.S. soy planting remains at a much slower than average pace, there has been no implied yield loss yet, and it is still possible for soybean acres to benefit from late corn planting efforts. The ongoing short-covering rally could certainly continue, but with record U.S. and world supplies of soybeans, the upside in the short-term could be limited. DTN's National Soybean Index closed at $7.51 Wednesday, priced 84 cents below the July contract and near its lowest prices in 12 years.

Wheat:

Wheat closed sharply higher again on Thursday following a late day sell-off on Wednesday. Chicago July wheat is leading the way higher and now sits above the key 50-day moving average, an area where funds will typically look to exit shorts. July wheat has now rallied 50 cents per bushel from Monday's low. Although the best winter wheat conditions in years is likely good news for hard red winter (HRW) wheat, soft red winter (SRW) will likely be encountering production and quality issues as the eastern belt and Delta SRW areas have been deluged with rains. Funds remain short and are undoubtedly covering a net position estimated to be 75,000 contracts short in Chicago to begin Thursday. There have been several tenders around, with Tunisia said to have bought 75,000 mt (2.2 mb) of optional soft wheat, and Algeria taking 600,000 mt (22 mb) of milling wheat for July. The U.S. has participated in recent Algeria purchases and the hope is that this is no different. Despite meager weekly export sales of wheat at just 4.2 mb, total commitments are now 9% higher than a year ago at 943 mb, while shipments are up 4%. Ahead of the impending U.S. wheat harvest the upside could be limited with the burdensome 1.1 billion-bushel U.S. carryout and record large world ending stocks. DTN's National HRW index closed at $3.87 Wednesday, 15 cents under the July contract and up from its lowest prices in over a year.

Dana Mantini can be reached at Dana.Mantini@dtn.com

Follow him on Twitter @mantini_r

(CZ)

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