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GRAIN MARKETS: Small recoveries follow bigger drops

Spring wheat sets more contract highs.

Corn and soybean eked out small profit-taking gains on Monday after last week’s declines but the forecasts for rain in the Midwest this week likely limited recoveries.

Winter wheat closed lower after last week’s one-year highs, while spring wheat kept moving up and set more contract highs as dry conditions in the northern Plains have traders worried about that crop. 

Forecasts have rain this week for much of the Midwest with storms developing on Tuesday in Nebraska and spreading east to Iowa and northern Illinois on Wednesday. The 6- to 10-day outlook (July 1-5) is warm and wet for the Midwest and the northern Plains

Equities were up when the crops closed, with the Dow industrials up about 40 points. The dollar and crude oil were higher and gold lower.

Exports – USDA, Reuters:

-       USDA said Bangladesh bought 4.04 million bushels of 2016/2017 U.S. soybeans.

-       South Korea’s MFG feed group bought 418,000 metric tons of optional-origin corn last week for October-November arrival.

-       South Korea’s Nonghyup feed company bought about 207,000 metric tons of optional-origin corn last week for November arrival in South Korea. The likely origins are the U.S. and South American, European traders said. The two purchases followed the drop in U.S. corn prices last         week

-       Iraq seeks to buy 50,000 metric tons of hard wheat from the U.S., Canada or Australia. The tender closes July 3 with offers valid until July 9. Shipment details were not published.

-       Bangladesh is in the market for 50,000 metric tons of wheat. The tender closes July 11, with shipment 40 days after deals are signed.

Corn closed a little higher at it rebounded from last week’s slide. The crop appears to be on the mend with the trade expecting a mild improvement later today in the crop’s 67% good/excellent rating.

The first week of July will be hot, according to the 6- to 10-day forecast, but Midwest grain dealers said that should not affect corn pollination, which will be a week or two later.

The seven-day forecast favors beneficial rain for the Midwest with total amounts of five inches or more near the Iowa-Missouri border.

Europe has had hot weather and reports on Monday had some crop forecasters there trimming yield estimates for EU corn.

The CBOT estimated Monday’s volume at 499,459. Friday’s actual volume was 601,963. Open interest in Friday’s lower market increased by 36,764 with July’s down 74,961 and December’s up 11,003.

July corn closed up 1-1/4 at $3.59 and new-crop December up 1-3/4 at $3.77.

What to Look For: Attention will be on the Midwest storms this week. Farm Futures expects next week’s planting report to keep corn acreage near USDA’s current 90 million estimate and June 1 stocks at 5.095 billion versus USDA’s year ago number of 4.72 billion.

Soybeans closed about two cents higher after last week’s tumble to their lowest since April 2016. Gains were kept in check by the wet forecasts and by ideas USDA will raise the crop’s condition rating a little in this afternoon’s weekly progress report.

CFTC’s Friday report showed funds added short positions as of last Tuesday, which is a change after they reduced shorts the week before. 

The CBOT estimated Monday’s volume at 213,259. Friday’s actual volume was 337,540. Friday’s open interest in the flat to lower market decreased by 41,250 with July’s down 75,860 and November’s up 20,863.

July soybeans closed up 2-1/4 at $9.06-3/4 and August rose 2-3/4 to $9.11-1/4. New-crop November rose 2-3/4 to $9.13-3/4.

What to Look For – Rain amounts and breadth of coverage the next few days will be at the forefront of traders’ minds. Farm Futures expects next week’s planting report to show a few more soybean acres than what USDA’s current 89.48 million. It expects June 1 stocks at 986 million versus the 870 million a year ago.

Winter wheat markets closed lower and spring wheat higher. Winter wheat harvest is under way in the Plains and Midwest with custom harvesters reporting a wide range of yields for the HRW wheat.

Spring wheat climbed a little higher, which was enough for more contract highs. The gains came amid worries about the crop’s condition in the northern Plains and export demand.

The latest forecasts show the heat moderating in western Europe. Wire reports last week said hot conditions in France, Spain and eastern Europe raised concerns for wheat and others crops there.  .

The CBOT estimated Monday’s SRW volume at 134,533. Friday’s actual volume was 143,216. Open interest in Friday’s weak SRW market decreased by 15,134 with July’s down 21,393 and September’s up 2,906.

Chicago’s July SRW wheat closed down 9-3/4 at $4.50 and September dropped 8 to $4.65-1/2. Kansas City’s July hard red winter wheat dropped 11-1/4 to $4.53 and September dropped 11 to 471-1/2. Spring wheat for July rose 2-1/2 to $6.63-3/4 and September rose 2-1/2 to $6.68-3/4.

What to Look For – The harvest has moved into Kansas but rain and immature wheat has slowed progress. Farm Futures expects USDA’s stocks report on Friday to show about 1.164 billion bushels of wheat as of June 1 versus 981 million a year ago.

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