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DTN Early Word Grains         07/19 06:03

   Grains Higher, Trade Limps Off After Disappointing Week

   December corn is up 1/2 cent per bushel, November soybeans are up 3 1/4 
cents, and September K.C. wheat is up 2 3/4 cents.

By Tregg Cronin
DTN Contributing Analyst

6:00 a.m. CME Globex:   December corn is up 1/2 cent per bushel, November 
soybeans are up 3 1/4 cents, and September K.C. wheat is up 2 3/4 cents.

CME Globex Recap:   Global equity markets are higher as we close in on the July 
Federal Reserve meeting on July 30-31 with expectations at 100% for a 25 basis 
point (bp) cut in benchmark rates. In fact, expectations have risen as high as 
58% for a 50 bp cut from just a 6% chance earlier this week. A 50 bp cut would 
seem extreme considering employment figures remain strong, and despite the 
trade tiff with China, the U.S. economy still appears strong. In grains, most 
contracts are higher to close what has been a negative week of trade. After 
opening strong on threatening maps Sunday, forecasts have improved and markets 
have extracted premium. There is still a lot of grass between the ball and the 
hole, but it would appear the current ranges in our space will hold until the 
calendar flips to August or the next WASDE report dials in supply-side data. 
The weaker trade Thursday felt like the first time bulls had actually 
entertained the idea seasonal highs could be in, although a couple days of 
strength likely keeps bulls fed.

OUTSIDE MARKETS:   Previous closes Thursday showed the Dow Jones Industrial 
Average up 3.12 at 27,222.97 and the S&P 500 up 10.69 at 2,984.42 while the 
10-Year Treasury yield ended at 2.038%. Early Friday, the September DJIA 
futures are up 39 points. Asian markets are higher with Japan's Nikkei 225 up 
420.75 (2%) and China's Shanghai Composite up 2302 points (0.79%). European 
markets are higher with London's FTSE 100 up 3.82 points (0.05%), Germany's DAX 
up 17.28 points (0.14%) and France's CAC 40 up 0.51 points (0.01%). The 
September Euro is down 0.003 at 1.130 and the September U.S. dollar index is up 
0.246 at 96.695. The September 30-Year T-Bond is down 3/32nds, while August 
gold is up $10.90 at $1,439.00 and August crude oil is up $0.69 at $55.99. 
Soybeans on China's Dalian Exchange were up 0.09% while soybean meal was -0.49%.



   BULL                                    BEAR
1) According to the latest GFS models,  1) Corn export sales totaled 7.9
   most of the Corn Belt will be dry       million bushels (mb), well below the
   during the 6-10-and-8-14-day            13.6 mb needed and the sixth week in
   outlook, counting on follow up          seven that failed to hit the needed
   moisture.                               mark.
2) The managed fund net short position  2) After trading to the highest level
   in Minneapolis wheat now accounts       in two months, front-month crude oil
   for 23.3% of total open interest, a     futures have slipped back down to
   new all-time record.                    one-month lows with the June lows
3) Global ending stocks of corn are     3) New crop soybean export sales total
   forecast to fall 9.08% in 2019/20,      103.0 mb which compares with 325.8
   the largest percentage drop since       mb a year ago while the USDA is
   2010/11 and second largest since        calling for a 10% increase
   2006/07.                                year-over-year.


   CORN  Firmer corn prices as markets get set to close an ugly week with 
December corn down 27 1/2 cents since the Sunday night open. Despite the rough 
performance, December corn still did not enhance the range, remaining below the 
$4.73 highs from June and still above the $4.20 1/2 lows from early July. We 
still feel this range likely holds price action until we get to the August 
WASDE and receive an updated look at acres and yield. The Western Corn Belt and 
Plains will remain active the next 3 days before a dry spell takes hold and is 
expected to last through the end of July. Fortunately, 8-14 day maps from NOAA 
yesterday saw precipitation chances move from below normal to normal. 
Temperatures maintain their cool bias through the beginning of August. Demand 
indicators continue to be soft for corn with export sales coming in at 7.9 mb, 
below the 13.6 mb needed weekly to hit the USDA mark. Total commitments stand 
at 1.953 billion bushels (bb) which are down 16% from a year ago. USDA is 
calling for exports to be down 13.8% from a year ago, but shipments remain the 
real problem in our view. Cumulative exports as of July 11 totaled 1.760 bb vs. 
1.884 bb a year ago, leaving 340 mb of corn to ship during the remaining seven 
weeks of the marketing year. Without a meaningful change, the USDA could be 
forced to tweak lower their marketing year forecast.

   SOYBEANS  Soybean prices are higher with the November contract once again 
playing tag with the $9.00 mark. The chart pattern in soybeans is very similar 
to corn with neither highs nor lows made during a week in which the most 
actively traded contract lost 28 cents. Similar to corn, odds are low we trade 
outside of our established ranges until we get into the more important 
development weather for soybeans in August. While some areas of the Midwest 
could be leaning dry by the time pod-set and pod-fill begins, temperatures do 
not look threatening into the first week of August at least. Export sales 
remain nothing to write home about, unfortunately, with weekly commitments 
totaling 4.7 mb, pushing marketing year commitments to 1.787 bb. Total 
commitments are already 87 mb above the USDA objective but the shipments 
category remains troubling. Cumulative exports total 1.447 bb, leaving 253 mb 
to ship between now and the end of August. The new crop book is also a concern 
with commitments less than one third of the total on this same date a year ago. 
USDA expects export demand to increase 175 mb in 2019/20, a tall task in our 
opinion as estimates of Chinese import demand continue to fall. If Chinese 
demand cannot rebound, it appears difficult in our opinion to expect the rest 
of the world to make up the difference.

   WHEAT  Wheat contracts are higher across the three exchanges with Chicago 
wheat trying to close higher for the first time in five sessions. For the 
week-to-date, September Chicago wheat is down 26 1/2 cents and did make new 
lows for the move, having spot prices at the lowest level since the end of May. 
Despite a supportive July WASDE report, optimism has faded with bulls as the 
Northern Hemisphere still has to harvest a majority of its bushels. In 
addition, Russia remains the main focus in regards to the global wheat balance 
sheet, and they did participate in this week's GASC tender, even if some of the 
values did look a bit out of place. A tightening supply outlook for the major 
exporters will push demand to the United States in the second half of the 
marketing year, which is fine as long as the demand actually surfaces, and 
importers aren't incentivized to hold off until new crop as they were in 
2018/19. Large inverses in export offers gave huge incentive to minimize 
purchases until the Black Sea and Europe had replenished supplies. Speaking of 
exports, weekly export sales totaled 12.8 mb vs. the 13.7 mb needed weekly to 
hit the USDA objective. This was the fifth week out of the last six in which 
sales failed to meet the needed level. Total commitments of 288.7 mb are still 
22% ahead of a year ago with the USDA calling for a 1.4% increase. The USDA 
should be in no hurry to adjust their marketing year objective until more Q1 or 
even Q2 is complete.

              DTN Cash   Change From    National      Contract   Change from
Commodity     Index      Prev Day       Avg. Basis    Month      Prev Day
Corn:         $4.17      -$0.11         -$0.08        Sep        $0.000
Soybeans:     $8.12      -$0.02         -$0.70        Aug        -$0.004
SRW Wheat:    $4.74      -$0.11         -$0.19        Sep        $0.008
HRW Wheat:    $4.11      -$0.09         -$0.22        Sep        -$0.001
HRS Wheat:    $4.79      -$0.02         -$0.46        Sep        -$0.002


   Tregg Cronin can be reached at 

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



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