DTN Closing Grain Comments

Grains Fall Back; Higher Temps Ahead

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

General Comments:

July corn closed down 7 3/4 cents per bushel and December corn was down 7 1/2 cents. July soybeans closed down 12 3/4 cents and November soybeans were down 13 1/2 cents. July KC wheat closed down 8 cents, July Chicago wheat was down 1/2 cent and July Minneapolis wheat was down 2 1/4 cents. The September U.S. dollar index is trading down 0.373 at 95.765. The Dow Jones Industrial Average is up 28.52 points at 26,781.69. August gold is up $4.10 at $1,401.00, July silver is down $0.19 at $15.30 and July copper is down $0.0100 at $2.7020. August crude oil is up $0.45 at $57.52, August heating oil is up $0.0325, August RBOB is up $0.0588 and July natural gas is up $0.007.

For the week:

July corn closed down 10 3/4 cents and December 2019 corn was down 10 cents. July soybeans were up 6 cents and November 2019 soybeans were up 4 cents. July Kansas City wheat was down 23 3/4 cents, July Chicago wheat was down 12 1/2 cents, and July Minneapolis wheat was down 27 1/4 cents.

Corn:

July corn closed down 7 3/4 cents at $4.42 1/4 Friday, finishing the week down 10 3/4 cents and yet still near its highest July price in four years. It is not likely that much corn planting is going on at this late date, but if it is, the weather map has heavy rain over Iowa and northern Missouri after seeing scattered showers the past week and more rain over the Eastern Corn Belt. The seven-day forecast has even more rain anticipated for the Corn Belt, but if there is good news for crops, higher temperatures and drier forecasts are expected after this weekend. As mentioned this week, USDA's Acreage Report on June 28 will not be precise and a better estimate is likely to follow in August, but it will narrow the guessing game the market is currently playing and could result in a strong price move in either direction. The demand side of the corn market is currently suffering with cheaper corn from South America already competing for exports. Fundamentally speaking, without knowing how much corn has been planted or what yields will be this fall, the outlook remains neutral to bullish. Technically, the trend remains up as cash corn prices are among their highest in five years. DTN's National Corn Index closed at $4.31 Thursday, 19 cents below the July contract. In outside markets, the September U.S. dollar index is trading down 0.37, its lowest price in three months while many anticipate a rate cut in July.

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Soybeans:

July soybeans fell 12 3/4 cents to $9.02 3/4 Friday, ending the week with a 6-cent gain. As described above for corn, this week's weather may have allowed some planting progress, but probably not a lot as the central and eastern Midwest remains wet with more rain expected in the seven day forecast. One factor pressuring Friday's prices lower is the anticipation of drier weather and higher temperatures after this weekend, giving crops a much-needed boost in development. As with corn, next Friday's Acreage Report from USDA could also have a price-moving surprise waiting for soybeans and it is difficult to guess which way those prices will go, but down still seems more likely than up. On the demand side, there is little to cheer about for soybeans as actual shipments are down 24% in 2018-19 from a year ago and China is sitting on 221 mb of U.S. purchases not yet shipped. The market will be interested in next week's interaction between the presidents of the U.S. and China at the G-20 meeting, but there is no sign that either side is budging yet. Fundamentally, U.S. soybean prices are weighed down by record U.S. soybean supplies and lack of trade with the world's largest buyer of soybeans. Technically, the trend in cash soybeans is up, but suspect. DTN's National Soybean Index closed at $8.39 Thursday, $0.77 below the July futures contract and near its highest price in a year.

Wheat:

July KC wheat finished 8 cents lower Friday at $4.52 1/2, posting a 23 3/4 cent loss on the week. The U.S. winter wheat harvest has gotten off to a slow start with recent heavy rains in the southwestern U.S. Plains and eastern Midwest and more rain expected in the seven-day forecast. The disruption is apt to hurt wheat quality, but we can't say it has had a major impact on markets as prices have largely taken the news in stride. The higher-rated winter wheat crops this year are in the northwestern U.S. where the harvest outlook is more favorable. Just to the north, Canada's spring wheat crops are expecting moderate to heavy showers the next seven days, welcome relief after this year's dry start. Outside of North America there is some concern of dry weather in eastern Ukraine and Russia's wheat areas, but nothing serious yet. Eastern Australia and Spain have also been on the dry side, but overall the world's wheat regions are doing well at this time. Fundamentally, the anticipation of a record world wheat crop in 2019 remains bearish for wheat prices. Technically, the trend is up for SRW wheat, but may be waning. The trends for HRW and HRS wheat are sideways. DTN's National HRW Index closed at $4.42 Thursday, down 18 cents from the July futures contract. DTN's National SRW Index closed at $5.12 Thursday, among its highest prices in ten months.

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

Follow him on Twitter @ToddHultman1

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Todd Hultman