DTN Closing Grain Comments

General Comments:

July corn closed down 5 cents per bushel and December corn was down 5 1/2 cents. July soybeans closed up 3/4 cent and November soybeans were up 3/4 cent. July KC wheat closed down 10 1/4 cents, July Chicago wheat was down 8 cents and July Minneapolis wheat was down 7 3/4 cents. The September U.S. dollar index is trading up 0.098 at 97.150. The Dow Jones Industrial Average is up 387.64 points at 26,500.17. August gold is up $7.40 at $1,350.30, July silver is up $0.16 at $14.99 and July copper is up $0.0560 at $2.7025. July crude oil is up $1.97 at $53.90, July heating oil is up $0.0280, July RBOB is up $0.0298 and July natural gas is down $0.059.

Corn:

In two-sided trade, December corn ended up 5 1/2 cents lower. A better than expected planting pace of 92% was revealed on Monday's crop progress, but this is still well behind normal, and emergence of just 79% compares to the average of 97%. Confusion exists over how the planting percentage is computed and the implication from NASS agents is the percentage is based on what the farmer intended to plant last week and not compared to March intentions. The ability to determine at this stage how much of a farmer's intended acreage will go to prevented planting is leading to questions of accuracy, and we won't know until a much later date. It is all very confusing and that uncertainty led to some selling Tuesday. The 92% planted based on the March intentions of 92.8 million acres would leave 7.4 million acres yet to be planted. Analysts are ratcheting up their ideas of how much acreage might be lost on the June 28 USDA report versus March intentions. Right now, it appears as if the trade sees corn prevented planting from 6 million to 9 million acres. The weather for the next 7 days does not bode well; most notably Illinois, Indiana, Michigan and Ohio are well behind. Weather for late June does seem to suggest a change in pattern to warmer and drier. While the corn supply side looks to be compromised dramatically this year, demand for U.S. corn has all but disappeared on the export front as U.S. corn is a huge premium to primary competitors. Brazil's total corn crop -- its second and bountiful safrinha crop in the early stages of harvest -- could be even larger than USDA's 100 mmt estimate last month; indications are final production could be 103 mmt to 104 mmt. Also challenging corn demand domestically is U.S. hard red winter (HRW) wheat with a very good chance that more of the expected low protein wheat could make its way into Southern Plains feedlots. Corn basis, however, in the Eastern Corn Belt has surged as end users try to secure supplies. On a further break, the old highs of $4.38 on July and $4.53 to $4.54 on December will be the first support levels. DTN National Corn Index closed at $4.33 on Monday, 22 cents below the July contract.

Soybeans:

Soybeans have not been the primary focus of the delayed planting situation, but in the past few days traders have begun to pay more attention to the prospect for both soybean yield and production to fall along with corn. Soybean old- and new-crop futures made new highs in Monday's overnight trade as funds continued to exit their net-short positions. Monday's crop progress report revealed soybean planting was just 77% done -- below the pre-report estimates of 79% to 81%, and well under the 93% average pace. With a very wet 7-day forecast ahead, and key soy states like Illinois, Indiana, Ohio, Missouri and Michigan severely lagging the normal pace of planting, analysts are now thinking even soybean acres could be lower and yield drag on beans is likely. Based on intended acreage from March, there still remain 19.7 million acres unplanted as of Sunday. Heavy rains again are expected to affect the central and eastern Plains in the coming week. July soybeans had rallied $1.21 off the mid-May lows as funds, estimated to be still short 42,000 contracts after Monday's close, reeled in much of that short. Demand, which has been lacking all year as the U.S. and China have failed to come up with a trade agreement, continues to suffer, with U.S. soy exports now down 26% versus last year. Fear that China could cancel or roll forward part of the 6.3 mmt (231 mb) of beans they have bought but not yet shipped is also a concern. Soybeans are relatively strong on Tuesday as presidents Donald Trump and Xi Jinping have spoken and still plan to meet at the G-20 regarding trade. That has stoked optimism that perhaps trade talks could resume, though no solution is expected next week. Weather may soon change to be more favorable, with a warmer and drier pattern expected in late June. DTN's National Soybean Index closed at $8.36 on Monday, 77 cents below the July contract.

Wheat:

After reaching new rally highs on Monday in Chicago wheat, all three wheat markets sold off Tuesday, led by Kansas City and Chicago. Even though winter wheat harvest was pegged at just 8% done versus the average pace of 20%, wheat conditions remained the best since 2010, at 64% good to excellent; spring wheat, despite a minor decline, was well above the 5 and 10-year averages at 77% good to excellent. Early hard red winter (HRW) yield indications are said to be huge, but key states of Oklahoma and Kansas face more heavy rains on the weekend and early next week. Oklahoma is just 16% harvested compared to an average of 56%, while Kansas has barely gotten started at 1% versus a 12% average. U.S. wheat is also likely reacting to the fact that the recent rally in wheat has totally priced U.S. wheat out of export markets with U.S. soft red said to be as much as $30/mt above EU wheat offers. One of the major wheat problem areas -- the Canadian Prairies -- is said to have a wetter outlook in coming weeks. Australia, on the other hand, following a drop in production last week, saw ABARE (Bureau of Agricultural Research and Economics) lower their export projection by 18% due to the drought-impacted crop which is being called 11% lower than a year ago. DTN's National HRW Index closed at $4.55 Thursday, 21 cents under the July contract and up from its lowest prices in over a year.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow him on Twitter @Mantini_r

(CZ)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.