DTN Closing Grain Comments

Soybeans Lead Grains to Higher Closes

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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General Comments:

September corn closed up 2 1/2 cents per bushel and December corn was up 2 1/4 cents. August soybeans closed up 8 1/2 cents and November soybeans were up 8 1/2 cents. September KC wheat closed up 2 1/4 cents, September Chicago wheat was up 2 cents and September Minneapolis wheat was up 2 1/4 cents. The September U.S. dollar index is trading down 0.360 at 96.735. The Dow Jones Industrial Average is up 77.73 points at 26,861.22. August gold is up $15.80 at $1,416.30, September silver is up $0.09 at $15.24 and September copper is up $0.0700 at $2.6950. August crude oil is up $2.62 at $60.45, August heating oil is up $0.0811, August RBOB is up $0.0814 and August natural gas is up $0.010.

Corn:

December corn ended up 2 1/4 cents at $4.39 1/2 Wednesday on light volume, marking time ahead of Thursday's 11 a.m. CDT WASDE report. Thursday's report is unusual in the sense that USDA will likely raise its estimate of U.S. ending corn stocks, based on the higher planting estimate from June 28. The catch, however, is there are many questions about that planting estimate which hopefully will be resolved by a second survey to be released Aug. 12. The result is the market may not show much response to Thursday's WASDE estimates for corn or soybeans, choosing instead to wait for the August WASDE report (see "July WASDE: Mirage or for Real?" in Wednesday's DTN feed). For the record, Dow Jones' survey estimates U.S. ending corn stocks at 1.642 billion bushels (bb) for 2019-20, a little lower than the June estimate of 1.675 bb and apparently ignores the June 28 planting estimate. Other than unusually heavy rainfall in south-central Nebraska Tuesday, most of the Corn Belt is experiencing drier weather and the forecast looks hot and dry the next ten days for the Western Corn Belt, not as hot for the Eastern Corn Belt. Fundamentally speaking, it is difficult to narrow down corn prices before the Aug. 12 planting estimate, so the outlook remains neutral with bullish possibility. Technically, the trend in cash corn has turned sideways after reaching the highest prices in five years. DTN's National Corn Index closed at $4.21 Tuesday, 11 cents below the September contract and down from this year's high. In outside markets, the September U.S. dollar index is down 0.36 after AP News reported Federal Reserve Chairman Jerome Powell told Congress trade tensions continue to weigh on the U.S. economic outlook. Powell's comments are considered supportive for a rate cut.

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Soybeans:

November soybeans closed up 8 1/2 cents at $9.12 3/4 Wednesday, also on lower volume ahead of Thursday's report. USDA's 80.0 million acre soybean planting estimate from June 28 gives soybean prices bullish hope for a lower estimate of U.S. ending soybean stocks on Thursday. Dow Jones' survey agrees, expecting the estimate to drop from 1.045 bb in June to 812 million bushels (mb) in July. Many of the same questions for corn estimates also apply to soybeans so it wouldn't be a shock to see USDA's planting estimate adjusted higher for soybeans in August. The more interesting number for soybeans Thursday will be the yield estimate, which Dow Jones' survey expects to come in at 48.4 bushels per acre, down from 49.5 bushels per acre in June. As good-to-excellent crop ratings for soybeans are at their lowest in seven years, there is room for an even lower yield estimate Thursday. The seven-day forecast looks drier, which is favorable for crops in the northern and eastern Midwest. The western Midwest will also have hotter temperatures the next ten days, a source of possible crop stress. Fundamentally, the outlook for soybean prices remains bearish, but could be moderated by lower soybean production in 2019. Technically speaking, the trend is sideways in cash soybeans with support around $7.85. DTN's National Soybean Index closed at $8.14 Tuesday, 72 cents below the August contract.

Wheat:

September KC wheat ended up 2 1/4 cents at $4.41 1/2 after a quiet day of low-volume trading. Wheat prices will likely respond to whatever corn does Thursday, but probably won't find much in USDA's estimates to be shook up about. Dow Jones' survey expects a new U.S. production estimate of 1.905 bb instead of June's 1.903 bb. HRW wheat production is expected at 804 mb, but could be higher, based on recent favorable harvest reports. Wednesday's weather map shows rain in eastern Kansas and Missouri, but conditions are mostly favorable for winter wheat harvest progress. Among world estimates, Europe, Ukraine and Russia will get close looks, but world production is likely to be still on track for a record high in 2019. Fundamentally speaking, the anticipation of a world record wheat crop is the main roadblock for higher wheat prices and until that can be challenged, the lid stays on. Technically, the trend is currently sideways for cash SRW wheat and down for HRW and HRS wheats. DTN's National HRW Index closed at $4.18 Tuesday, 21 cents below the September contract. DTN's National SRW Index closed at $4.83, 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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Todd Hultman