DTN Before The Bell Grains

Morning CME Globex Update:

Dow Jones futures are 87 points higher early on Friday. August crude oil is up 17 cents per barrel, the U.S. dollar index is down 0.0660 and August gold is up $3.90 an ounce.

Other Markets:

Dow Jones:	Higher
U.S. Dollar Index:	Lower
Gold:	Higher
Crude Oil:	Higher

Corn:

Corn is slightly lower on larger than expected July deliveries ahead of the usually volatile June stocks and seeding report. The June report is typically a big market mover and could be even more so this year. Although traders seek a better estimate of planted acres, the fact that the survey occurred in the first two weeks of June when farmers were still planting will make the estimate a bit suspect, but it's the bet we have to go on. The average planting estimate is right at 87 million acres in a range of 84.3 to 88.8, according to Dow Jones. The 87 million would be a decline of 5.8 million acres from the March intentions and compares to 89.8 million acres in USDA's June report. It is the June 1 stocks number that could be the true market mover, as the range of pre-report estimates leaves room for a surprise. The average estimate for corn stocks is 5.308 billion bushels (bb), according to Dow Jones, and that would be one of the largest June stocks numbers in history. Corn export sales last week were a dismal 11.6 million bushels (mb), with total commitments of 1.918 bb down 15% versus a year ago. The thought is that U.S. corn exports could be further cut by 100-150 mb in future reports, helping to cushion the blow of lost acres. The weather forecast looks to be warm and dry, just what the doctor ordered for a crop that is severely lacking in growing degree days. Crop conditions on Monday's crop progress report are likely to improve. Following the report Friday, weather will take center stage as ultimate acreage will not be known until the fall. Look for the area of $4.50 to be pivotal for December corn, with a close below that leading to a further correction lower. DTN's National Corn Index closed at $4.25 on Thursday, with an average basis of 21 cents under September.

Soybeans:

Ironically, soybeans are a bit firmer to begin Friday trade when most seem convinced that Friday's USDA stocks and seeding report can be nothing but bearish for soybeans. The pre-report acreage estimate is little changed from the March intentions of 84.6 million acres, but the range is 83 to 86.5 million acres according to the Dow Jones survey. Soybean acreage could still surprise to the upside as planting continues. The June 1 stocks report is expected to be record large at an average estimate that is 640 mb higher than a year ago at 1.856 bb. That would be over 50% higher than last year. Soybeans exports have been waning, but shipments remain the big issue. China has some 200 mb of sales that are still unshipped, but China did ship out nearly 15 mb last week. Some in the trade see half of the unshipped balance possibly being rolled into new crop. Today's all-important meeting in Japan at the G-20 summit between Presidents Trump and Xi Jinping will be closely watched, though China does not seem to share the same optimism as U.S. trade representatives. China is reportedly seeking large concessions, including the removal of tariffs. Sunday night trade could be very volatile along with Friday day trade. The market's focus will then shift totally to weather. Following the disastrous spring, soybeans need a near-perfect growing season. While the $9.40 to $9.50 range for November beans should continue to find hefty sell orders, the $9.10 area is one to watch with a close under that likely bearish. DTN's National Soybean Index closed at $8.14 and reflects an average basis of 80 cents under August. At 8 a.m. USDA reported 544,000 metric tons of soybeans sold to China for delivery in 2018-2019.

Wheat:

Wheat is mixed to begin Friday, and like in soybeans, trade expects a mostly neutral to bearish report on wheat. U.S. wheat ending stocks are pegged at 1.1 bb, burdensome by any measure. Early returns from the delayed hard red winter wheat (HRW) harvest are indicating high test weights, impressive yields, and as harvest moves north, a higher protein content. Some analysts feel that the HRW crop could be far higher than the 794 mb USDA is currently projecting. The much talked about heat wave in Europe is set to change to cooler and wetter, and France AgriMer's 80% good to excellent reading on soft wheat is unchanged from the previous week and compares to 74% last year. U.S. wheat exports in the new year have been one bright spot with total commitments now up 25% versus a year ago at 225.3 mb. Spring wheat acreage is pegged at an average of 12.6 million acres, figuring a drop of 200,000 acres, but many in the trade see the delayed planting in a very wet spring leading to much larger losses. Weather in the Northern Plains is expected to be beneficial in coming days, with rains expected to help the spring wheat crops. However, the drought monitor now shows above normal dryness creeping into parts of North Dakota. With a totally clear radar screen and warming temps in southern HRW and SRW harvest areas, expect harvest activity and pressure to increase in coming days. DTN's National HRW index closed at $4.52, and the average basis is at 30 cents under September.

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

Follow him on Twitter @Mantini_r

(CZ)

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