DTN Early Word Grains
Corn, Wheat on Track For Higher Friday Finishes
July corn is up 4 3/4 cents, July soybeans are down 2 1/4 cents and July KC wheat is up 5 cents.
CME Globex Recap:Dow Jones futures are starting lower early Friday, in line with lower European markets. The June U.S. dollar index is up 0.07, but staying quiet near its highest prices in two years, while most other commodities are mixed. Corn is on track to complete a bullish outside weekly reversal Friday, facing serious planting challenges in May.
OUTSIDE MARKETS:Previous closes on Thursday showed the Dow Jones Industrial Average up 214.66 at 25,862.68 and the S&P 500 up 25.36 at 2,876.32, while the 10-yr Treasury yield ended at 2.40%. Early Friday, DJIA futures are down 107 points. Asian markets are mixed with Japan's Nikkei 225 up 187.11 (0.9%) and China's Shanghai Composite down 73.41 points (-2.5%). European markets are lower with London's FTSE 100 down 35.55 points (-0.5%), Germany's DAX down 96.03 points (-0.8%), and France's CAC 40 down 31.79 points (-0.6%). The June Euro is down 0.001 at $1.119 and the June U.S. dollar index is up 0.07 at 97.75. The June 30-Year T-Bond is up 9/32nds, while June gold is down $0.80 at $1,285.40 and June crude oil is up $0.51 at $63.38. Soybeans on China's Dalian Exchange were showing a small loss, while meal had a slight gain.
| BULL | BEAR | ||
| 1) | It may be repetitive, but we can't ignore the heavy rain amounts in the seven-day forecast, adding to row crop planting difficulties in late May. | 1) | Trade talks with China have ceased and it is not clear if there ever was any progress on the tougher issues. |
| 2) | It is possible this week will end with bullish outside weekly reversals in corn, soybeans and winter wheat, applying pressure to large bearish noncommercial positions. | 2) | Until China's 25% tariff on U.S. soybeans is eliminated, U.S. ending soybean stocks will continue to increase beyond current record levels. |
| 3) | Last week's U.S. wheat exports came in at 30.7 million bushels (mb), above the amount needed each week to reach USDA's new export goal. | 3) | The latest rally in Chicago wheat is an impressive sign of support, but U.S. wheat supplies remain abundant. |
CORN July corn is up 4 3/4 cents early Friday, not showing signs of backing down yet while the seven-day forecast continues to show heavy rain amounts around much of the Corn Belt, this time including more of Illinois. Given the late date on the calendar and even more wet conditions expected in NOAA's 8 to 14 day forecast, it no longer feels speculative to say that corn acres are going to be lost in early 2019. There will be much debate about how many prevented plantings the year will see, but for now, the main feature of this market is that it has quickly gone from a deeply bearish mood with heavy noncommercial selling to having a legitimate reason for new buying that is putting speculators under pressure to liquidate their shorts. That explains the bullish outside weekly reversal that is corn is likely to finish with on Friday and puts DTN's index of cash corn prices at a new high in 2019.
SOYBEANS July soybeans are down 2 1/4 cents and July soybean meal is down $1.20 early Friday, still on track for higher finishes to the week. In the case of July soybeans, a close above $8.36 1/4 is needed Friday to complete the formation of a bullish weekly outside reversal. Whether the technical conditions are met or not, it is still difficult to build a bullish fundamental case for soybean prices in 2019 while China holds a 25% tariff on U.S. soybeans. This week's higher soybean prices are partly due to corn's success in creating a rally and making shorts nervous for all crop prices. There is also a chance that prevented plantings will also increase for soybeans, but given the possibility of U.S. ending stocks exceeding 1 billion bushels (bb) in 2018-19, any lost production will have to be pretty substantial to sustain higher prices. It is interesting that July soybean prices are holding above the old 2008 low of $7.96 and there is plenty of uncertainty yet as to how trade talks will play out in 2019. The outlook for soybean prices now however, remains bearish
WHEAT July KC wheat is up 5 cents early, adding to this week's gains and giving bearish noncommercials a reason for pause as winter wheat prices appear to have found support near multi-year lows. This week's prices have been influenced by the rally in corn and there is risk that the heavy rains in the seven-day forecast will be detrimental to wheat crop conditions. In the case of spring wheat, the rains come at a time when producers are struggling to get crops planted in the Dakotas and Minnesota. Friday morning showers between Montana and Ohio add to the notion that spring wheat acres will be lost in early 2019 and July Minneapolis wheat is responding to events with a 12 3/4 cent gain early Friday. Fundamentally, it is important to remember that so far, the world is still likely to produce more wheat than it did in 2018. Russia, in particular remains a bearish threat in the competition for exports.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.54 | $0.10 | -$0.25 | Jul | $0.001 |
| Soybeans: | $7.56 | $0.05 | -$0.83 | Jul | $0.006 |
| SRW Wheat: | $4.40 | $0.20 | -$0.27 | Jul | $0.013 |
| HRW Wheat: | $4.01 | $0.14 | -$0.16 | Jul | -$0.007 |
| HRS Wheat: | $4.84 | $0.11 | -$0.43 | Jul | -$0.009 |
Todd Hultmancan be reached at todd.hultman@dtn.com
Toddcan be followed throughout the day on Twitter@ToddHultman1
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