DTN Closing Grain Comments

Soybeans Lead Grains Higher Friday

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

General Comments:

September corn closed up 6 1/4 cents and December corn closed up 6 cents. August soybeans closed up 20 1/4 cents and November soybeans were up 20 1/4 cents. September KC wheat closed up 7 1/4 cents, September Chicago wheat was up 9 cents and September Minneapolis wheat was up 3 3/4 cents. The September U.S. dollar index is trading up .36 at 96.81. The Dow Jones Industrial Average is up 70.31 points at 27,293.28. August gold is up $0.10 at $1,428.20, September silver is down 1 cent at $16.19 and September copper is up $0.0395. August crude oil is up $0.42 at $55.72, August heating oil is up $0.299, August RBOB gasoline is up $0.0109 and August natural gas is down $0.029.

For the week:

September corn closed down 23 1/2 cents and December 2019 corn was down 23 1/2 cents. August soybeans were down 11 3/4 cents and November 2019 soybeans were down 12 1/4 cents. September Kansas City wheat was down 27 1/4 cents, September Chicago wheat was down 20 1/2 cents, and September Minneapolis wheat was down 13 1/2 cents.

Corn:

December corn closed up 6 cents at $4.35 3/4, along with most commodities Friday. For the week, however, prices were down 23 1/2 cents. Corn prices continue to chop between roughly $4.20 and $4.70 a bushel with traders keeping an eye on weather, while we all wait for USDA's second planting survey to be released Aug. 12. Friday's weather map shows rain in northwestern Minnesota, but was mostly dry elsewhere with hot temperatures across much of the Corn Belt through Saturday. Scattered light to moderate showers are expected the next seven days with heavier amounts for Wisconsin. Milder temperatures in the forecast for next week are helping ease concerns about corn getting closer to pollination. It still sounds odd to talk about corn pollinating in late July and August, but that is where the crop is headed in this unusual year. U.S. corn exports have fallen off dramatically and are not likely to rebound any time soon as FOB corn prices in New Orleans are 42 cents higher than comparable prices at Brazil's ports. Fundamentally, the outlook for corn prices is neutral with a smaller crop expected in 2019. There is still a bullish possibility the crop will be even lower than expected, and USDA's next important clue is set for Aug. 12. Technically, the trend in cash corn is sideways, down from its highest prices in five years. The DTN National Corn Index closed at $4.17 Thursday, 8 cents below the September contract. In outside markets, the September U.S. dollar index is up 0.36 with unconfirmed talk that The European Central Bank may be close to reducing its interest rate by a quarter-percent. In spite of the stronger dollar, most commodities are trading higher Friday.

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Soybeans:

November soybeans closed up 20 1/4 cents at $9.19 1/4 Friday, nearly erasing the last three days of losses and finishing the week with a smaller loss of 12 1/4 cents. Both, the Midwest and the northeastern U.S. are covered with heat advisories and excessive heat warnings Friday and more of the same is expected Saturday. Survivors will see more moderate temperatures Sunday, extending into next week. The late-planted soybean crop is just starting to bloom and pod setting is still several weeks away. The U.S. Drought Monitor doesn't recognize any problem in the Midwest yet, but there are areas where crops need rain and the forecast for just light to moderate amounts in the central Midwest is of some concern. It is no secret that U.S. soybean demand remains a large bearish concern with 434 million bushels (mb) fewer soybean exports anticipated in 2018-19. Officials from the U.S. and China spoke about trade by phone Thursday, but no significant progress was reported. Until China drops its 25% tariff on U.S. soybeans, the fundamental outlook for U.S. soybean prices remains bearish. At the same time, the anticipation of a smaller soybean crop in 2019 is helping ease the bearish severity and is helping keep prices above their 12-year lows. Technically, the trend in cash soybeans is up with prices back down from their highest level in a year. The DTN National Soybean Index closed at $8.12 Thursday, 70 cents below the August futures contract.

Wheat:

September KC wheat closed up 7 1/4 cents at $4.40, getting some help from Friday's higher corn price and a dose of short-covering. For the week, KC wheat was down 27 1/4 cents and September Chicago wheat was down 20 1/2 cents as both managed to hold above support within their sideways trading ranges. In spite of Friday's higher prices, it is still difficult to find anything bullish to say on behalf of wheat prices. This week's hot temperatures were not pleasant, but present no significant problem for the ongoing winter wheat harvest. The U.S. spring wheat crop has been doing well and is expected to see some stress early next week from hotter temperatures and a mostly dry forecast for the northwestern U.S. Other spring wheat regions in Canada and Russia are also dealing with drier conditions, which should limit production somewhat, but no serious threats to world production are seen at this time. Fundamentally, as long as world wheat production remains on track for a new-record high in 2019, wheat prices will continue to be under a lid of bearish pressure. Technically, the trends for SRW, HRW and HRS wheat are all sideways and Friday's higher closes kept prices above support. The DTN National HRW Index closed at $4.11 Thursday, down 22 cents from the September futures contract. The DTN National SRW Index closed at $4.74 Thursday, near its June low.

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

Follow him on Twitter @ToddHultman1

(CZ)

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Todd Hultman