DTN Closing Grain Comments

Rain Forecast Sends Winter Wheat Prices Higher

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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General Comments:

July corn closed down 2 3/4 cents per bushel and December corn was down 2 cents. July soybeans closed up 1 1/4 cents and November soybeans were up 1 1/2 cents. July KC wheat closed up 13 3/4 cents, July Chicago wheat was up 16 3/4 cents and July Minneapolis wheat was up 11 1/2 cents. The June U.S. dollar index is trading down 0.511 at 97.155. The Dow Jones Industrial Average is up 15.85 points at 24,830.89. August gold is up $18.10 at $1,329.20, July silver is up $0.22 at $14.79 and July copper is up $0.0210 at $2.6610. July crude oil is down $0.28 at $53.22, July heating oil is down $0.0335, July RBOB is down $0.0304 and July natural gas is down $0.055.

Corn:

July corn ended Monday down 2 3/4 cents at $4.24 1/4 on light volume, as traders wait for USDA's planting progress numbers at 3 p.m. CDT. The past week had some planting opportunities and 70% progress is possible in Monday afternoon's report, but conditions remain limited by wet fields that don't show much sign of getting better the next seven days. Moderate to heavy amounts fell over eastern Nebraska and western Iowa Monday, a precursor of more to come this week, especially for the southern and Eastern Corn Belt where flooding issues have been a constant concern. Earlier Monday, USDA said last week's export inspections of corn totaled 29.3 million bushels (mb) as of May 30, less than the 45.2 mb needed each week to meet USDA's export estimate, but with total inspections still ahead of pace for 2018-19. Fundamentally, this wet spring in 2019 has made estimating a 2019 corn crop much more difficult than usual. Increased use of the prevented planting option seems likely, but the production requirement in the new Market Facilitation Program adds to the difficulty in predicting just how many corn acres might be lost. The bottom line is corn prices have a wide range of uncertainty amid a neutral to bullish projection. Technically, the trend of cash corn prices remains up. DTN's National Corn Index closed at $4.00 Friday, 27 cents below the July contract and near its highest level in four years. In outside markets, the June U.S. dollar index is trading down 0.51 with increased talk the U.S. economy may be slowing down. Dow Jones reported earlier Monday that Mexico sent a delegation to the U.S. to discuss immigration issues.

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Soybeans:

July soybeans ended up 1 1/4 cents at $8.79 Monday, keeping a firm tone in quiet trading, while planting and trade issues swirl around U.S. grain markets. In addition to Mexico showing a willingness to talk about immigration issues, Dow Jones reported that China has also signaled a willingness to keep discussing trade issues, but the White House has not yet replied. Actual progress on trade matters with China remains a distant hope and until there is movement on China's soybean tariff, it is difficult to expect much higher prices for soybeans. The current outlook for planting remains difficult, but soybeans have a better chance than corn to eventually get planted. Earlier Monday, USDA said 18.3 mb of soybeans were inspected for export last week, well below the 33.6 mb needed each week to reach USDA's export estimate of 1.775 bb in three months. The perpetual lack of soybean exports makes it likely 2018-19 will end with more than 1 billion bushels of U.S. ending soybean stocks, a bearish weight for prices, even at these lower levels. Technically, last 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 $7.96 Friday, 82 cents below the July contract and up sharply from its lowest prices in 12 years.

Wheat:

Winter wheat was the star of trading in grain contracts on Monday, closing up 13 3/4 cents at $4.86 3/4 in July KC, a new three-month high related to weather concerns. July Chicago wheat was up 16 3/4 cents to $5.19 3/4, also a new three-month high. A tropical disturbance from Mexico is expected to bring heavy rain amounts into the U.S. Southern Plains this week, adding to flooding concerns in HRW and SRW wheat regions. The full extent of these problems for wheat will not be reflected in Monday afternoon's crop condition numbers and may not be well understood until harvested wheat makes it to the elevators. The U.S. Wheat Associates reported Friday that HRW wheat harvest has begun across South Texas. While the U.S. winter wheat crop is threatened by wet weather, wheat in the western Canadian Prairie saw hotter temperatures recently and is in need of rain, some of which is expected this coming weekend. Other areas reporting concerns of dry weather include Australia, eastern Ukraine, southern Russia and Russia's spring wheat crop. So far, these are not considered serious problems in terms of global production, but the season is still young. Technically, the trend is up for all three U.S. wheats, helped by the anticipation of reduced crop conditions and corn's planting problems. DTN's National HRW Index closed at $4.55 Friday, 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

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Todd Hultman