DTN Closing Grain Comments

Soybeans, Soft Wheat Lead Grains Higher

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

July corn closed up 2 1/4 cents per bushel and December corn was up 1 1/2 cents. July soybeans closed up 18 3/4 cents and November soybeans were up 18 1/2 cents. July KC wheat closed up 5 1/4 cents, July Chicago wheat was up 8 1/4 cents and July Minneapolis wheat was down 4 3/4 cents. The June U.S. dollar index is trading up 0.255 at 96.900. The Dow Jones Industrial Average is down 65.60 points at 25,982.91. August gold is up $5.60 at $1,336.80, July silver is up $0.02 at $14.76 and July copper is down $0.0215 at $2.6500. July crude oil is down $1.94 at $51.33, July heating oil is down $0.0361, July RBOB is down $0.0677 and July natural gas is down $0.015.

Corn:

July corn closed up 2 1/4 cents at $4.30 Wednesday, extending Tuesday's gain after USDA cut its estimate of U.S. ending corn stocks from 2.485 billion bushels (bb) to 1.675 bb, its first significant acknowledgement of this year's planting problems. In terms of plantings, USDA's 3-million-acre reduction was modest, given the seriousness of the current situation. The seven-day forecast expects heavy rains from Oklahoma through the eastern Midwest and into the northeastern U.S. and Ontario, keeping some of the wettest areas out of contention. USDA's 10-bushel per acre (bpa) reduction could be a good first guess, but it will be difficult to get a read on corn or soybean yields until USDA's first field surveys, due in September. Here in the first two weeks of June, USDA is gathering data for its acreage estimate on June 28, a report that will get a lot of attention and likely be amended in August. On the demand side, the Department of Energy said ethanol production jumped to 1.096 million barrels per day (bpd) last week, not far from its weekly record of 1.108 million bpd. Ethanol inventories fell from 22.6 million barrels to 21.8 million, a sign of active demand. Fundamentally, the price outlook for corn remains neutral to bearish, even at these higher prices. Technically, the trend of cash corn prices remains up and is challenging resistance near $4.54, its four-year high. DTN's National Corn Index closed at $4.03 Tuesday, 25 cents below the July contract and near its highest prices in four years. Outside markets were mostly bearish for grains with the June U.S. dollar index up 0.25 and July crude oil down $1.94. The U.S. Labor Department said consumer prices were up 1.8% in May from a year ago.

Soybeans:

July soybeans closed up 18 3/4 cents at $8.78 Wednesday, a surprise rally that got help from USDA Chief Economist Robert Johansson. According to Wednesday's Reuters news, Johansson said he anticipates changes in the soybean crop estimate in the July WASDE report. It is unusual for USDA's Chief Economist to comment on future reports, but in this case his statement confirms popular expectations that soybean yields will likely be reduced by this year's late planting and wet conditions. Tuesday's June WASDE report was actually slightly bearish for soybeans with both old- and new-crop ending stocks estimates now pointed above 1 billion bushels, the most on record. The larger bearish concern for soybeans of course, is on the demand side of the market and there has been no trade progress with China of late. Fundamentally speaking, the price outlook for soybeans remains overwhelmingly bearish, except for this year's poor crop conditions. Trade talks with China are currently not going well, but the chance for a solution remains a possible bullish factor. Technically, soybean prices are chopping sideways, staying below the 100-day average at $8.98. DTN's National Soybean Index closed at $7.80 Tuesday, 80 cents below the July contract and falling back from resistance near $8.00.

Wheat:

July KC wheat closed up 5 1/4 cents to $4.62 3/4, climbing back above its 100-day average with help from more rain in the forecast. Wednesday's seven-day outlook expects heavy rains from Kansas and Oklahoma to Ohio and Michigan, drenching both HRW and SRW wheat crops as harvest is getting underway and adding to possible flooding concerns. The rain is probably more of a threat to wheat quality than to yield and will make for some wide pricing differences in the month ahead. The market can also anticipate an increase in feed wheat supplies. Welcome and needed rains are expected in the western Canadian Prairies the next seven days, one reason July Minneapolis wheat was down 4 3/4 cents Wednesday. Outside of North America, reports of wheat problems are minor, supporting USDA's new view that world wheat production will increase 7% in 2019 to a new record high 781 mmt (28.69 bb). Technically, the trend is currently up for cash SRW and HRS wheats and sideways for HRW wheat. DTN's National HRW Index closed at $4.38 Tuesday, down from its recent three-month high and 19 cents below the July contract. DTN's National SRW Index closed at $5.01, near its highest prices in three months.

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

Follow him on Twitter @ToddHultman1

(CZ)

Todd Hultman