DTN Closing Grain Comments

General Comments:

July corn closed up 17 1/2 cents per bushel and December corn was up 16 1/2 cents. July soybeans closed up 17 cents and November soybeans were up 17 cents. July Kansas City wheat closed up 25 3/4 cents, July Chicago wheat was up 24 cents and July Minneapolis wheat was up 14 cents.

The June U.S. dollar index is steady at 98.035. The Dow Jones Industrial Average is up 23.43 points at 25,149.84. June gold is up $6.40 at $1,287.40, July silver is up $0.09 at $14.51 and July copper is down $0.0150 at $2.6490. July crude oil is down $1.69 at $57.12, July heating oil is down $0.0437, July RBOB is down $0.0526 and July natural gas is down $0.072.

Corn:

July corn continues to push higher with scattered showers on Thursday's weather map and more rain falling on wet fields in the Eastern Corn Belt. Prices finished up 17 1/2 cents at $4.36 1/4, their highest level since June 2018. The extended forecast is looking somewhat more favorable for planting, but the seven-day forecast still shows moderate rain amounts across the Corn Belt, making already soggy fields even wetter. The obvious issue is that corn planting is being pushed well into June, adding to the risk of losing yield as well as the risk of acres not getting planted. Clearly, the new situation supports higher corn prices than we have seen the past four years, but just how high is the impossible question of the moment with so many important pieces of the puzzle missing. Earlier Thursday, the Department of Energy said last week's ethanol production slipped from 1.071 to 1.057 million barrels per day, a slight change given corn's higher price. Ethanol inventory fell from 23.4 to 22.6 million barrels, a sign of decent demand as the driving season begins. Fundamentally, the price outlook for corn remains bullish with potential for a significant reduction in ending corn stocks in 2019-20. Technically, the trend is up and DTN's index of cash corn prices will settle well above $4.00 on Thursday evening. DTN's National Corn Index closed at $3.92 Wednesday, priced 27 cents below the July contract and near its highest level in nearly three years. In outside markets, the June U.S. dollar index is unchanged after the Commerce Department said U.S. GDP was up 3.2% in the first quarter from a year ago, a slight downward adjustment from last month.

Soybeans:

July soybeans closed up 17 cents at $8.89 Thursday, continuing to put noncommercial shorts under pressure to cover their positions while the market shows concern about this year's planting potential. The trickier thing about soybeans is that they have the ability to be planted later than corn and still do well, if weather cooperates the rest of the summer. Of course, there is no guarantee of that happening, and as mentioned above, the current seven-day forecast remains wet for most of the Midwest. Also offering some bullish help to U.S. soybean prices, Brazil's FOB soybean prices had a big gain in May and are now 55 cents above FOB prices in New Orleans. The difference doesn't cover China's tariff, but it does give the U.S. a better shot at non-Chinese business. Fundamentally, the outlook for soybean prices remains bearish even though this year's production may be limited by adverse weather. A trade agreement with China has the potential to change the bearish outlook, but is looking unlikely at the moment. Technically, Wednesday's higher close changed the trend in soybeans to sideways, reflecting uncertain planting conditions and crop season ahead. DTN's National Soybean Index closed at $7.90 Wednesday, priced 82 cents below the July contract and up sharply from its lowest prices in 12 years.

Wheat:

Wheat prices have been accused of suffering from multiple personalities, and it seems true again this week. July KC wheat closed up 25 3/4 cents at $4.79, erasing Wednesday's big loss with help from another rally in corn and more rain in the seven-day forecast for the southwestern U.S. Plains. Flood advisories remain in effect from Nebraska to Oklahoma where good-to-excellent crop ratings were high just a few weeks ago and the SRW wheat crop has suffered a long, wet spring in the eastern Midwest. Outside of the U.S., the western Canadian Prairies need rain as does eastern Australia. Eastern Ukraine and southern Russia are expecting hot and dry weather to stress crops in the week ahead. Overall, world wheat production still looks mostly favorable at this early stage. Earlier Thursday, the International Grains Council (IGC) increased its estimate of world wheat production from 762 million metric tons (mmt) to 766 mmt (28.15 billion bushels). That would be a new record high, if true, but recent weather challenges are apt to trim that lower next month. It is impressive that July KC wheat is trading above its 100-day average and noncommercial shorts have likely run for cover, but it is difficult to see fundamental support for a significant wheat rally yet. Technically, the trend is currently up for all three U.S. wheats, helped by reduced crop conditions and corn's planting problems. DTN's National HRW index closed at $4.35 Wednesday, up sharply from its lowest close in over a year and 17 cents below the July contract. DTN's National SRW index closed at $4.66, near its highest prices in three months.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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