What DTN is Watching

Kent Beadle, DTN Contributing Analyst

   EARLY MORNING GLOBEX NET CHANGES: July corn is down 4 3/4 cents per bushel,
July soybeans are down 5 1/4 cents, July KC wheat is down 6 cents, July Chicago
wheat is down 8 cents and July Minneapolis wheat is down 5 cents.

   CME GLOBEX RECAP: World equity markets are mixed, with the U.S. market
seeing some profit-taking Tuesday morning while world markets are catching up
to Monday's very strong rally. The agreement between the U.S. and China to
pause their tariff war and begin more substantial negotiations resulted in a
huge move in U.S. markets, with the Dow gaining over 1100 points. Tuesday's
trade so far has been tied to some profit-taking as traders will want to see
progress with the promised negotiations.

   OUTSIDE MARKETS: Previous close Monday showed the Dow Jones Industrial
Average up 1,160.72 at 42,410.10 and the S&P 500 up 184.28 at 5,844.19, The
10-Year Treasury yield ended at 4.457%. Early Tuesday, the June Dow Jones
Futures are down 126 points. European markets are higher with the spot futures
of London's FTSE 100 trading up 0.26%, spot futures of Germany's DAX are
trading up 0.18% and the spot futures of France's CAC 40 Index up 0.15%. Asian
markets are higher with Japan's Nikkei 225 Index up 1.43% and China's Shanghai
Composite Index up 0.17%.

   The June euro is up 0.002 at 1.113 and the June U.S. Dollar Index is down
0.139 at 101.460. The June 30-Year T-Bond is down 2/32nds, while June gold is
up $31.50 at $3,259.50 and June crude oil is up $0.49 at $62.44. On China's
Dalian Exchange, July corn was down 0.8% while July soybeans were up 0.1%,
September soybean meal was up 0.35% and July Malaysian Palm Oil was trading up
2.07%.

   BULL                                  BEAR
   There are rumors of movement on       Winter wheat conditions improved 3
   45Z which could support soybean       percentage points this week, providing
1) oil values.                        1) some evidence for the USDA's higher
                                         yield forecast.

   Higher gasoline prices and lower      Wheat markets made new contract lows
2) corn continue to support ethanol   2) again Tuesday morning.
   production margins.

   Soybeans broke out of a sideways      July corn futures are testing their
   chart pattern on Monday and the       recent lows on bear-spreading and
3) technical outlook for soybeans is  3) worries about future demand.
   strong.


   MORE COMMODITY-SPECIFIC COMMENTS

CORN:

   Corn futures are lower Tuesday morning, reacting to planting progress that
is now well ahead of last year's pace as well as the 5-year average.
Additionally, the forecast appears to be bringing some moisture to the Corn
Belt, which may be welcome after an open period where soils have gotten dry,
particularly in the Western Corn Belt. Monday afternoon's progress report
showed planting progress reached 62% planted, 15 percentage points ahead of
last year's pace and 6 percentage points ahead of the 5-year average. States
well ahead of average include Nebraska, South Dakota, Minnesota, and Iowa.
Indiana and Wisconsin are slightly ahead of average; Illinois, Missouri, North
Dakota, and Ohio are behind the 5-year average pace.

   The WASDE report released Monday was mostly bullish relative to trade
expectations, but it triggered more bear-spreading from traders due to the
increase in the size of the Brazilian Safrina crop. Old-crop ending stocks fell
50 million bushels (mb) due to a conservative 50 mb increase in the export
projection, which is now at 2.600 billion bushels (bb). Old-crop stocks-to-use
fell to 9.3% -- very close to the result from 2021-2022 crop year when the
average corn price was $6.00. The average corn price for 2024-2025 is now
projected at $4.35. New-crop ending stocks were forecast at 1.8 bb, which was
244 mb below the average trade estimate which was at 2.044 bb. The one bearish
item from the WASDE was the increase in the Brazilian corn production which
rose from 126 million metric tons (mmt) to 130 mmt due to good conditions. It
should be noted, however, that Brazilian ending stocks are falling not rising,
and exports in 2025-26 are not forecast to increase as domestic demand
continues to grow. Additionally, world ending stocks are projected to fall from
287 mmt in 2024-25 to 277 mmt in 2025-26 due to a significant tightening of
Chinese supplies. The entire increase in world ending stocks -- minus China --
are being carried in the United States. This will support ongoing strong U.S.
exports through the 2025-26 crop year.

   Export inspections released on Monday morning remain good, with 48.2 mb of
inspections this week. Total inspections remain 28.6% ahead of last year's
pace, with the new USDA estimate up 11.8% from a year ago.

SOYBEANS:

   Soybean prices are lower Tuesday morning, pulling back from Monday's strong
gains that were partially due to the pause in the tariff war between the U.S.
and China. Treasury Secretary Bessent suggested the phase one agreement would
be a good place to start negotiations, which suggests U.S. agricultural
products might be one way in which the trade deficit between the two countries
is addressed. Tuesday morning's lower trade is likely tied to the soybean
planting progress pace which remains well above normal. Monday's planting
progress was reported at 48%, up 14 percentage points from last year's pace and
up 11 percentage points from the 5-year average.

   Monday's WASDE report was mildly supportive, with ending stocks for old-crop
falling to 350 mb on a 25 mb higher U.S. export forecast. On the new-crop
balance sheet, production is forecast to be 4.34 bb, 26 mb lower than a year
ago. The domestic crush rises by 70 mb, to 2.49 bb, while exports fall a very
modest 35 mb to 1.815 bb. That forecast doesn't appear to factor in a tariff
war, which may be appropriate given the news on Monday. Ending stocks at 295 mb
are enough, but should yield fall even 0.5 bushels per acre to a record 52
bushels per acre, the ending stocks will fall to about 250 mb which gets very
tight. Any more yield adversity than that and we would need to do some
rationing.

   Monday's export inspections report remained good for this time of the year
at 15.6 mb. The current pace of inspections is up 11.0% from a year ago, with
the new USDA estimate up 8.3%.

WHEAT:

   U.S. wheat futures are lower, as the record-short managed-money position
continues to grow and press down on the market due to good weather and the
USDA's assessment of winter wheat yield which did grow on Monday's report.
Winter wheat is expected to yield 53.8 bushels per acre (bpa), with Kansas
yield at 50 bpa, up 16.3% from a year ago. Increases in Colorado and Oklahoma
are also significant. The initial U.S. balance sheet puts 2026 U.S. ending
stocks at 923 mb, up 82 mb from the 2025 estimate. It is interesting that USDA
has U.S. exports falling by 20 mb, when reports of wheat exports from the Black
Sea region and Russia have been declining. Traders took this as an opportunity
to keep hitting the sell button, and they are doing so again Tuesday morning.
Monday's export inspections at 14.8 mb were in line with recent weeks, but
below the average needed to hit the USDA estimate.

              DTN Cash   Change From    National      Contract   Change from
Commodity     Index      Prev Day       Avg. Basis    Month      Prev Day
Corn:         $4.20      -$0.01         -$0.28        Jul        $0.007
Soybeans:     $10.19     $0.20          -$0.52        Jul        $0.004
SRW Wheat:    $4.55      -$0.06         -$0.61        Jul        $0.003
HRW Wheat:    $4.39      -$0.09         -$0.69        Jul        $0.005
HRS Wheat:    $5.59      -$0.09         -$0.25        Jul        $0.003

   Kent Beadle can be reached at kentbeadle@gmail.com

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