DTN Closing Grain Comments

General Comments:

September corn closed down 7 cents per bushel and December corn was down 6 1/2 cents. August soybeans closed up 7 cents and November soybeans were up 6 1/2 cents. September KC wheat closed down 1 1/2 cents, September Chicago wheat was down 8 1/4 cents and September Minneapolis wheat was down 6 cents. The September U.S. dollar index is trading up 0.106 at 97.090. The Dow Jones Industrial Average is down 68.70 points at 26,737.44. August gold is up $0.60 at $1,400.60, September silver is up $0.09 at $15.14 and September copper is down $0.0320 at $2.6270. August crude oil is up $0.13 at $57.79, August heating oil is up $0.0140, August RBOB is up $0.0253 and August natural gas is up $0.017.

Corn:

December corn dropped 6 1/2 cents to $4.37 1/4 Tuesday, showing bearish concern about what USDA may estimate on Thursday. Monday afternoon's Commitment of Traders report showed 74% of noncommercials on the long side of the market, holding 300,799 net longs as of July 2. Knowing USDA typically uses the acreage estimate from the end of June, there is a good chance USDA will increase its estimate of U.S. ending corn stocks for 2019-20 on Thursday. The problem of course, is that 15.8 million acres of corn were still unplanted at the time of the survey so there is not much confidence in the June 28 report. But speculators are at risk of being influenced by Thursday's new numbers, even if only for a day. Late Monday, USDA said 8% of corn started silking and 57% of the crop was rated good to excellent, up 1 point from last week, but still the lowest such rating in seven years. In a report dated July 2 and released Tuesday, USDA's attache in Beijing said, "High corn prices reflect a tightening supply situation for feed grains across China," and went on to explain they expect 230 million metric tons (9.05 billion bushels) of corn production in China, the lowest since 2012-13. Fundamentally, the corn market continues to face a wide range of uncertainty that should be narrowed by a second planting survey, due out Aug. 12. Technically, the trend in cash corn has turned sideways after hitting the highest prices in five years. DTN's National Corn Index closed at $4.27 Monday, 13 cents below the September contract and within a dime of this year's high. In outside markets, the September U.S. dollar index is up 0.11 ahead of Fed Chairman Jerome Powell's testimony to Congress on Wednesday. Other commodities are mixed, but August feeder cattle were up 3.97 and August hogs were up their 3-cent daily limit.

Soybeans:

November soybeans closed up 6 1/2 cents at $9.04 1/4 Tuesday, finding modest support in front of Thursday's WASDE report. Late Monday, USDA said 90% of soybeans had emerged, 10% were blooming and 53% of the crop was rated good to excellent. The crop rating was 1 point lower than last week and is the lowest in seven years. On the surface, Monday's news plus USDA's 80.0 million acre planting estimate from June 28 should give soybean prices bullish expectation going into Thursday's WASDE report. This year however, things aren't so easy for soybean prices as there is not a lot of confidence yet in USDA's planting estimate and the lack of trade with China remains an overwhelming bearish concern. Tuesday's seven-day forecast still expects rain in North Dakota and Minnesota, also reaching into northwestern Iowa. The rest of the Midwest however, is expected to stay mostly dry, which should be helpful to fields in the eastern Midwest where poor-to-very poor crop ratings are the highest. Monday's Commitment of Traders report showed noncommercials roughly neutral in soybeans and commercials net long 17,169 contracts, a slight show of support. Technically speaking, the trend is sideways in cash soybeans as prices stay below their one-year high at $8.41. DTN's National Soybean Index closed at $8.06 Monday, 73 cents below the August contract.

Wheat:

September KC wheat closed down 1 1/2 cents at $4.39 1/4 as the U.S. winter wheat harvest continues to make progress. USDA said late Monday that 47% of winter wheat was harvested, mostly in the U.S. Southern Plains. The Kansas harvest was 61% complete while Nebraska was just starting at 2% finished. Likewise, Oregon was 2% harvested, while Washington and Montana had not yet started. On the spring wheat side, USDA said 56% of the crop was headed and 78% of the crop was rated good to excellent, up 3 percentage points from last week. Thursday's Crop Production report will have new production estimates for U.S. wheat categories, but only a minor change is expected to June's 1.903 bb estimate of U.S. wheat production. Overall, it is difficult to see any reason yet why the U.S. won't maintain its heavy surplus of wheat supplies in 2019-20. Other major wheat regions seem to be doing well enough and September milling wheat in Paris fell 3.75 euros or 2.1% Tuesday to its lowest close in over a month. Technically, the trend is currently sideways for cash SRW wheat and down for HRW and HRS wheats. DTN's National HRW Index closed at $4.19 Monday, 22 cents below the September contract. DTN's National SRW Index closed at $4.92, down from its highest prices in four years.

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

Follow him on Twitter @ToddHultman1

(CZ)

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