Corn, Wheat Slide on Improved Conditions, Favorable Weather

CME GLOBEX RECAP:

July corn is down 1/4, July soybeans are up 3 3/4 cents. July KC wheat is down 3 3/4, July Chicago wheat is down 4 1/2, and July Minneapolis wheat is down 4 3/4. 

OUTSIDE MARKETS:

The Dow Jones Industrials Index rose 1 point Monday and Dow futures are up 28 points early Tuesday. June crude oil is up 38 cents per barrel. The U.S. Dollar Index is up .025 and June gold is up $4.90 an ounce.

CORN:

December corn futures are slightly lower, reacting to the improved crop ratings and a favorable weather forecast ahead. Corn in good-to-excellent condition rose another 2 percentage points to 71%. Although that is 3 points lower than a year ago, it is still above average. Corn planting has now advanced to 97% complete with 87% of the crop emerged. Major corn producer Iowa has the best rating at a stout 85% good to excellent; Ohio, Indiana and Pennsylvania are lagging on planting and some of those acres could go into soybeans. The forecast for the Corn Belt is for warmer temperatures and plentiful rain. Heavy rain is forecast in the Wednesday to Friday time frame for the northwest belt, with southern Minnesota, northern Iowa and western Wisconsin slated to get from 2 to 3 inches of rain. Rain will move to the Eastern Corn Belt by the weekend and could mean 1 to 2 inches for Ohio and Indiana. U.S. corn export demand continues to exceed expectations with the Thursday WASDE report likely to see the USDA revise exports higher by 75 million bushels (mb) to 100 mb. However, South America is now much more competitive. South Korean feed firms stepped up to buy this week, taking at least 269,000 metric tons (mt) of corn, with a good likelihood that much of that corn will be sourced from South America. In Brazil, the fledgling safrinha corn harvest is only 2% complete and behind last year by 8 percentage points, according to Ag Rural. Traders are awaiting word on any new trade deals after the meeting of U.S. and China trade representatives in London on Monday. The Trump administration also insists that trade deal announcements are imminent with Japan, India, South Korea and Vietnam, but no confirmation so far. Funds enter Tuesday having added to a net-short corn position now estimated to be 160,000 contracts. December corn appears on a path to test the yearly low just 8 cents away. DTN’s National Corn Index closed at $4.20 and 23 cents below the July contract.

SOYBEANS:

Soybeans are slightly higher with bean oil higher and soymeal lower early Tuesday. Monday’s crop progress report showed soybean planting at 90% done while the good-to-excellent rating rose one percentage point to 68%. As in corn, Iowa is leading the pack with an 80% good-to-excellent rating. The crop is now 75% emerged, about in line with the average. Market participants are waiting to hear any results from the Monday meeting in London of U.S. and China trade representatives, which included the U.S. Treasury and commerce secretaries. There are plenty of comments in the past week from the Trump administration about trade deals that are likely to be consummated; but so far, no confirmation. In addition to talks with China, ongoing negotiations are in progress with India, Japan, South Korea and Vietnam. The soybean cash market is tight in the old-crop slot, with the July-November spread reflecting an inverse of 18 cents per bushel. Soybean export demand continues to run ahead of USDA’s estimate and inspections are up 11% over a year ago with 12 weeks left in the crop year. Soybean inspections need to only average 16 mb per week to achieve the USDA estimate. The direction of the trade negotiations with China will play a big part in determining price down the road. In May, China was reported to have imported a record 13.9 million metric tons (mmt) (511 mb) which was more than double that of April. Weather in the U.S. continues to be bearish with a combination of sunshine, warming temperatures and rain over the next two weeks. Funds have only a minor soy position while being net-long 32,000 bean oil and short 97,000 soymeal contracts. DTN’s National Soybean Index closed at $10.10 with a soybean basis of 48 under the July futures board.

WHEAT:

All three wheat markets are down for the second consecutive day after Monday’s crop progress report showed improving conditions. Winter wheat gained 2 points in good to excellent to 54% — the best in years — while spring wheat conditions jumped 3 percentage points to 53% good to excellent, but that is the lowest since 2021. That is up 8 percentage points since the initial crop rating a few weeks ago. News from Russia is a bit bearish with the government saying the Russian grain crop will be 135 mmt, up 5 mmt from last year. Consultancy Sov Econ pegged the Russian wheat crop at up 1.8 mmt to 82.8 mmt (3.04 bb). Other crop scouts are as high as 84 mmt to 85 mmt on Russian wheat. Russia is the world’s cheapest wheat at $225/mt on an FOB basis. Funds come into Tuesday trade with a combined net-short position in KC and Chicago guessed to be 178,000 contracts (890 mb). DTN’s National HRW Index closed at $4.89 and 61 under the July futures board.

Dana Mantini can be reached at Dana.Mantini@dtn.com