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DTN Early Word Grains         06/17 06:02

   Sharply Higher Grains as Wet Weather Persists

   July corn is up 8 3/4 cents per bushel, July soybeans are up 16 1/2 cents, 
and July KC wheat is up 8 cents.

By Tregg Cronin
DTN Contributing Analyst

6:00 a.m. CME Globex:   July corn is up 8 3/4 cents per bushel, July soybeans 
are up 16 1/2 cents, and July KC wheat is up 8 cents.

CME Globex Recap:   Global equity markets are higher around the globe Monday 
with tensions between Iran and the U.S. dominating weekend headlines. Energy 
markets remains subdued, so it would appear the threat of transportation being 
halted through the Strait of Hormuz remains low at this time. Grain markets are 
sharply higher overnight as forecasts call for more wet weather in the coming 
week with producers still trying to finish soybean planting. Prevented planting 
ideas for soybeans are nowhere near those expected for corn but expectations 
are growing with each passing day. Aside from weekly crop progress, the next 
major event will be the June 28 acreage and stocks report, which could give 
further clues into the supply picture. Even that report will be suspect, 
however, given how much planting progress was still occurring in June as the 
survey was being conducted. The path of least resistance will remain up until 
the market is more comfortable with the supply picture of both corn and 
soybeans.  

OUTSIDE MARKETS:   Previous closes on Friday showed the Dow Jones Industrial 
Average down 17.16 at 26,089.61 and the S&P 500 down 4.66 at 2,891.64 while the 
10-year Treasury yield ended at 2.093%. Early Monday, the June DJIA futures are 
up 32 points. Asian markets are higher with Japan's Nikkei 225 up 7.11 (0.03%) 
and China's Shanghai Composite up 5.65 points (0.2%). European markets are 
higher with London's FTSE 100 up 10.4 points (0.14%), Germany's DAX up 18.2 
points (0.15%) and France's CAC 40 up 9.75 points (0.18%). The June euro is up 
0.001 at 1.120 and the June U.S. dollar index is down 0.035 at 97.535. The 
September 30-year T-Bond is down 8/32nds, while August gold is down $7.60 at 
$1,336.90 and July crude oil is down $0.24 at $52.27. Soybeans on China's 
Dalian Exchange were down -0.06% while soybean meal was up 1.26%.

   

   


   BULL                                     BEAR
1) Heavy rains are forecast for all of   1) New-crop soybean export commitments
   the central and Eastern Corn Belt in     as of June 6 of 65.9 million
   the coming seven days, raising           bushels are the lowest total for
   prospects for prevented planting         this date since the 2004-05
   soybean acreage.                         marketing year.
2) The Chinese National Grain and Oils   2) The Association of American
   Information Center said state reserve    Railroads said last week grain
   corn sales in 2019 will be half of       railcar volume fell 8.7% from the
   2018 levels as stocks decline            same week a year ago and is down
   swiftly.                                 4.9% year to date.

3) A Bloomberg survey of analysts        3) The gross commercial short position
   revealed the average guess for           in corn rose to 1,158,974 contracts
   prevented planting acreage is 6.7        last week, the largest position for
   million on corn and 2.2 million on       the group since May 29, 2018.
   soybeans.


MORE COMMODITY-SPECIFIC COMMENTS 

   CORN   Corn prices were higher overnight with the front end of the curve 
once again leading as end users in the Eastern Corn Belt raise concern about 
securing supplies. July corn is now at the highest level for a spot contract 
since June 2014 with the next meaningful resistance from prior price action up 
around the 2014 highs of $5.22. Corn prices are likely to face stiff resistance 
between $4.75 and $5.00 but it should be noted momentum indicators from a 
weekly perspective are showing no hints of slowing or diverging from price. 
Funds actually paused their buying in the previous reporting week, picking up 
just 1,948 contracts to push their net long to 66,933 contracts. While this is 
the first meaningful net-long position held by funds in a year, they have much 
more room to add to get anywhere close to the net-long positions witnessed 
between 2010 and 2016. 200,000 net-long positions were common, leaving funds 
ample room to add to current positions if they truly believe in the fundamental 
story of corn. Elevator hedging is picking up based on the gross commercial 
short position, which should be a good indicator when prices have gone far 
enough. Trade estimates for Monday afternoon's Crop Progress report expect 
planting progress at 95% to 96% complete vs. 83% last week and 100% las year. 
This commentator knows firsthand planters were still rolling on corn in both 
South Dakota and Iowa over the weekend. The extreme prevented planting ideas 
could be off the table, but the yield component is what will make or break this 
market.

   SOYBEAN   Soybean prices were higher overnight as concerns mount over final 
soybean planted acreage. Soybeans have the added benefit of still having a 
sizable fund short position underneath the market with that group growing more 
uncomfortable by the day. As of June 11, funds held a net-short position of 
115,169 contracts, up 7,029 on the week. Commercial positions barely changed on 
the week as price traded weakly early in the period only to regain strength by 
the end of the reporting range. The Crop Progress report on Monday afternoon is 
expected to show 78% to 82% of soybean planting complete vs. 60% last week and 
93% average. This would leave 15 million to 18 million acres left to be planted 
based on the March Prospective Plantings report. All of the Northern Plains, 
Nebraska and northern Wisconsin hit final plant dates on June 10 while Iowa, 
southern Wisconsin, northern Illinois and Michigan hit final plant dates on 
June 15. Remaining areas have until June 20 to plant and still receive full 
insurance coverage. On the demand front, we continue to monitor the outstanding 
soybean commitments to China, which totaled 233 million bushels as of June 6. 
Until these sales ship in full, there remains risk they are either rolled to 
2019-20 or canceled, which would send bushels directly to ending stocks. 
Shipments to China have picked up gradually the last few weeks but those 
purchases remain at risk.

   WHEAT  Wheat prices are higher following corn and soybeans with funds still 
net short all three wheat markets. As a percent of open interest, their net 
short is largest in Minneapolis at 8.0%, but funds still hold 44,055 contracts 
worth of a net short in Chicago wheat. Harvest remains delayed in the Southern 
Plains with U.S. Wheat Associates reporting test cutting is just beginning in 
Kansas. Only a limited number of samples from Texas and Oklahoma have been 
tested for quality so far but averages show 59.7 pounds per bushel for test 
weight and 10.9% protein. Quality will remain a concern the longer harvest is 
delayed with eastern HRW areas on tap for additional rain in the coming week. 
Dry areas of the Canadian Prairies and Northern Plains also remain on tap for 
needed moisture in the coming seven days with production estimates still very 
much up in the air. The USDA expects Canada to harvest 34.5 million metric tons 
(mmt) in the coming season, which would be the second largest production total 
on record. Boots-on-the-ground think this estimate is lofty by 2 million mmt to 
4 mmt, but plenty of growing season lies ahead. As long as corn and soybeans 
maintain their sharp uptrends, wheat prices will be forced to tag along, 
although U.S. FOB prices continue to put premium over competitor origins.

   


              DTN Cash   Change From    National      Contract   Change from
Commodity     Index      Prev Day       Avg. Basis    Month      Prev Day
Corn:         $4.31      $0.12          -$0.22        Jul        $0.005
Soybeans:     $8.19      $0.09          -$0.78        Jul        -$0.001
SRW Wheat:    $5.23      $0.03          -$0.16        Jul        $0.005
HRW Wheat:    $4.56      $0.07          -$0.20        Jul        -$0.014
HRS Wheat:    $5.16      -$0.07         -$0.47        Jul        -$0.037

   Tregg Cronin can be reached at tmcronin31@gmail.com 

   Tregg can be followed throughout the day on Twitter @5thWave_tcronin 


(BAS)

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