DTN Closing Grain Comments

Front-Month Corn Leads Push Higher

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

General Comments:

July corn closed up 11 cents per bushel and December corn was up 7 3/4 cents. July soybeans closed up 8 3/4 cents and November soybeans were up 8 1/4 cents. July KC wheat closed up 8 cents, July Chicago wheat was up 3 cents and July Minneapolis wheat was down 3 cents. The June U.S. dollar index is trading up 0.536 at 97.535. The Dow Jones Industrial Average is down 26.23 points at 26,080.54. August gold is down $0.30 at $1,343.40, July silver is down $0.09 at $14.81 and July copper is down $0.0280 at $2.6285. July crude oil is up $0.55 at $52.83, July heating oil is up $0.0269, July RBOB is up $0.0244 and July natural gas is up $0.060.

For the week:

July corn closed up 37 1/4 cents and December 2019 corn was up 29 3/4 cents. July soybeans were up 40 1/2 cents and November 2019 soybeans were also up 40 1/2 cents. July Kansas City wheat was up 27 1/4 cents, July Chicago wheat was up 34 cents, and July Minneapolis wheat was down 2 3/4 cents.

Corn:

July corn closed up 11 cents at $4.53 Friday, showing a second day of increased demand for corn's front-month contract. Friday's close was a new contract high for corn, securing a 37 1/4 cent gain on the week. Friday's seven-day forecast expects heavy rains from Kansas and Oklahoma to the northeastern U.S., not giving producers in the Eastern Corn Belt (ECB) much hope for planting anytime soon. If that wasn't enough, the extended forecast also looks wet for the ECB out to at least June 28. Front-month corn and cash corn prices are leading the push higher as traders warm up to the idea that U.S. ending corn supplies are likely to tighten more than previously expected in 2019-20. On the demand side, factors are mixed as rising U.S. corn prices are encouraging buyers to seek other sources, but also raising concerns among anyone needing corn this year that they should not wait to secure what they need. USDA announced early Friday 4.95 million bushels (125,613 mt) of new-crop corn were sold to unknown destinations. Fundamentally speaking, the consistently wet forecasts in June are keeping many of us concerned about the ability to produce corn in the U.S. in 2019, supporting a neutral to bullish price outlook. Technically, the trend remains up as cash corn prices near their highest prices in five years. DTN's National Corn Index closed at $4.20 Thursday, 22 cents below the July contract. In outside markets, the June U.S. dollar index is trading up 0.54 ahead of Wednesday afternoon's Federal Reserve announcement.

Soybeans:

July soybeans closed up 8 3/4 cents at $8.96 3/4 Friday, securing a 40 1/2 cent gain on the week. Even though the soybean crop has a better chance of maintaining its planting estimates, this month's rain is not helping its prospects in the eastern Midwest either. Earlier this week, USDA Chief Economist Robert Johansson suggested soybean yield estimates may be adjusted lower in the July 11 WASDE report, which seems as reasonable as USDA's move to lower the corn yield estimate in June. The similarities with corn end there, however, as soybeans are looking at over 1 billion bushels of U.S. ending soybean stocks in 2018-19 and possibly more in 2019-20 if the trade situation with China does not get resolved. Early Friday USDA issued a strange announcement, saying 4.8 mb of U.S. soybeans (130,000 mt) were sold to China for 2018-19 and 5.0 mb (136,000 mt) of the same were cancelled. Another 4.8 mb of U.S. soybeans (130,000 mt) were sold to unknown destinations for 2018-19. While July soybeans have gained over a dollar from the low in May, trading significantly higher from here remains difficult with several bearish concerns in play. Technically, the trend in cash soybeans is sideways. DTN's National Soybean Index closed at $8.10 Thursday, $0.78 below the July futures contract and a new two-month high.

Wheat:

July KC wheat traded both sides of Thursday's close and finished up 8 cents Friday at $4.76 1/4, posting a 27 1/4 cent gain on the week. With winter wheat crops getting close to harvest it is not helpful to see heavy rain amounts in the seven-day forecast from Kansas and Oklahoma across the eastern Midwest threatening problems for both HRW and SRW wheat crops. Among U.S. wheat contracts, July Chicago was this week's big winner, posting a gain of 34 cents, after adding 3 more cents on Friday. For spring wheat in the northwestern U.S., the forecast is for dry to light rain amounts, favorable for crops, while western Canada has beneficial rain in the forecast. Outside of North America, Spain and eastern Australia are commonly cited as two areas that need rain, but most wheat regions appear to be doing well. The $1.20 rally in July Chicago wheat since May 13 is impressive, but with record ending wheat supplies expected in 2019-20, it is difficult to expect much more on the upside. Technically, the trends are up for SRW and HRS wheats, sideways for HRW wheat. DTN's National HRW Index closed at $4.49 Thursday, down 19 cents from the July futures contract. DTN's National SRW Index closed at $5.19 Thursday, its highest price in over nine months.

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

Follow him on Twitter @ToddHultman1

(CZ)

Todd Hultman