DTN Early Word Grains

Row Crops Off to Lower Early Start

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

July corn is down 1 1/4 cents, July soybeans are down 5 1/2 cents and July KC wheat is up 3 1/2 cents.

CME Globex Recap:

Outside commodities are mostly higher early Thursday as are U.S. stock market futures and European stock markets. There is no movement on the trade front overnight with new U.S. tariffs set to be charged on Mexican goods June 10 and President Donald Trump threatening another $300 billion of tariffs on Chinese goods.

OUTSIDE MARKETS:

Previous closes on Wednesday showed the Dow Jones Industrial Average up 207.39 at 25,539.57 and the S&P 500 up 22.88 at 2,826.15, while the 10-yr Treasury yield ended at 2.12%. Early Thursday, DJIA futures are up 72 points. Asian markets are lower with Japan's Nikkei 225 down 2.06 (-0.01%) and China's Shanghai Composite down 33.62 points (-1.2%). European markets are higher with London's FTSE 100 up 41.50 points (0.6%), Germany's DAX up 50.16 points (0.4%), and France's CAC 40 up 31.22 points (0.6%). The June Euro is up 0.0005 at $1.124 and the June U.S. dollar index is down 0.06 at 97.19. The September 30-Year T-Bond is up 10/32nds, while August gold is up $7.30 at $1,340.90 and July crude oil is up $0.44 at $52.12. Soybeans and meal on China's Dalian Exchange were both lower.

BULL BEAR
1) The latest seven-day forecast is mixed as the forecast for heavy rain amounts is shifting eastward. Flash flood warnings in Kansas, Oklahoma, Arkansas and Missouri. 1) So far, new U.S. tariffs on Mexican goods are set to take effect June 10, possibly prompting a response that could be negative to U.S. ag interests.
2) Even as some late planting takes place, significant corn production loss looks likely in 2019 from a combination of lost acres and reduced yield. 2) China's 25% tariff on U.S. soybeans remains and President Trump is threatening another $300 billion of tariffs on Chinese goods.
3) This week's forecast expects unwelcome rain amounts in winter wheat areas at a time when USDA said 76% of the wheat is headed and Oklahoma should be close to harvest. 3) HRW wheat prices have reversed back from three-month highs and world crop conditions are generally favorable at this point in the new season.

MORE COMMODITY-SPECIFIC COMMENTS

CORN July corn is down 1 1/4 cents early Thursday, a quieter start to the day after falling back 10 1/2 cents Wednesday. The heavy rains in the seven-day forecast have shifted eastward and are allowing for better planting opportunities in the western and northern Corn Belt. That does not mean all is well as flash flood watches are posted around Kansas, Missouri and Arkansas and heavy rain amounts are still a problem in the Mississippi Delta and southeastern Corn Belt. It seems that everyone has a guess now for 2019 corn production, but at this point in time the only value of guessing is that it show us that it does not take much of a change in the acres and yield to significantly reduce ending corn stocks. USDA's WASDE report on June 11 probably won't offer much help and the June 28 acreage estimates will probably be revised, but could be helpful. Technically, the trend in cash corn prices remains up.

SOYBEANS July soybeans are down 5 1/2 cents and July soybean meal is down $2.50 early Thursday, finding it difficult to maintain the late May rally as planting opportunities loosen up a little in early June. As mentioned above, that does not mean all is well as the forecast remains excessively wet for the southeastern Midwest and flooding is an ongoing concern in Missouri and Arkansas. While weather remains the dominant concern in early June for row crops, trade issues also are important and are showing no signs of getting better for U.S. ag interests anytime soon. U.S. Treasury Secretary Steven Mnuchin is expected to meet with Chinese officials this weekend as President Trump repeated that he may soon assess Chinese goods with another $300 billion of new tariffs. New tariffs on Mexican goods are set to start Monday, June 10. Thursday morning's export sales report has low expectations for soybeans as a daily sales announcement has not been released by USDA in well over a week.

WHEAT July KC wheat is up 3 1/2 cents early, a minor bounce after losing 22 3/4 cents Wednesday. The latest seven-day forecast has light to moderate rain amounts expected in Kansas and Oklahoma, but conditions are already so wet that flash flooding watches are posted in the region and remain a threat to wheat quality as harvest time approaches. Winter wheat prices had a decent rally in late May and reached new three-month highs. However, this week's quick reversal lower adds to the notion that it is going to be difficult to expect much in the way of higher prices this year when world wheat production is expected to be up 6% in 2019-20 and U.S. supplies are apt to remain high. Technically, July K.C. wheat has fallen back below its 100-day average and Tuesday's high of $4.97 could mark resistance for the summer.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.88 -$0.10 -$0.26 Jul $0.003
Soybeans: $7.88 -$0.12 -$0.82 Jul $0.003
SRW Wheat: $4.72 -$0.17 -$0.18 Jul -$0.009
HRW Wheat: $4.25 -$0.23 -$0.21 Jul -$0.001
HRS Wheat: $5.00 -$0.13 -$0.47 Jul $0.008

Tregg Cronin can be reached at tmcronin31@gmail.com

Tregg can be followed throughout the day on Twitter @5thWave_tcronin

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Todd Hultman