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
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%.
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.
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
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 firstname.lastname@example.org
Tregg can be followed throughout the day on Twitter @5thWave_tcronin
Copyright 2019 DTN/The Progressive Farmer. All rights reserved.
Your local weather forecast from DTN can be sent to your email every morning free through DTN Snapshot