DTN Before The Bell Grain Comments

Grains, Oilseeds Reverse Previous Directions

Elaine Kub
By  Elaine Kub , Contributing Analyst
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

Most of the grain markets seem to be moving in the opposite direction of their previous inclinations this week, suggesting some Friday position-squaring might take place through the session. Outside markets are so far remaining stable inside previously-tested trading ranges.

Other Markets:

Dow Jones: Lower
U.S. Dollar Index: Lower
Gold: Higher
Crude Oil: Higher

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Corn:

The May corn contract hit a seven-month high of $3.95 1/4 this Tuesday, followed by the new-crop December contract's high of $4.12 on Wednesday, and the corn market has been slowly pulling back ever since. Generally quiet position-squaring may be seen through Friday's session, but the grain markets are likely to attract more speculative participation -- in one direction or another -- during the next two weeks ahead of the annual USDA Prospective Plantings report. U.S. stock indices have spent most of the week moving lower, since all businesses that buy raw materials or export anything would have a lot to lose in the event of a "trade war," and so do grains. The DTN National Corn Index, an average of cash bids around the country, was $3.49 Thursday, showing the national average basis level still at 38 cents under the May futures contract.

Soybeans:

Soybean meal futures are trading $3 higher Friday morning, but soybean oil and the entire global edible oils sector continues to linger in a downward trend, illustrating one reason why soybean futures have struggled to maintain their upward momentum in a tightening crush margin environment. Nearby soybean futures traded more than a nickel higher during the overnight session, helped along by light losses in the U.S. dollar index. The Brazilian real is also falling this week, however, getting as low as 30.2 cents overnight, and that's an influence that typically encourages global soybean prices to adjust lower. The DTN National Soybean Index was $9.62 Thursday, showing the national average basis bid still at 79 cents under the May futures contract. At 8 a.m. CT, the U.S. Department of Agriculture reported export sales of 20,000 metric tons of soybean oil for delivery to unknown destinations during the 2017-18 marketing year.

Wheat:

The latest U.S. Drought Monitor released Thursday morning documented expanding regions of moderate, severe, and extreme drought in the High Plains and Texas, just at the time when Hard Red Winter wheat fields are coming out of dormancy and in desperate need of some moisture. Some regions, like northeastern Kansas, could receive some rain over the weekend, but the forecast isn't extensive enough to be considered bearish to this market, especially when the rest of the region will experience strong, drying winds. Much of this concern about domestic HRW yield and abandoned acres could already be priced into the wheat futures charts, however, and prices are mostly lower Friday morning. Old-crop Hard Red Winter wheat's cash bids averaged $4.70 Thursday, or 43 cents under the May Kansas City contract. The SRW Index was $4.45 or 34 cents under the May Chicago contract. Hard Red Spring wheat's cash index was at $5.96 and average basis was at 19 cents under the May Minneapolis contract.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

Follow Elaine Kub on Twitter @elainekub

(KR)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Elaine Kub