DTN Before The Bell Grain Comments

Morning CME Globex Update:

Expectations for an interest rate rise this week, as well as ongoing uncertainty about a "trade war," have put investors in a selling mood at the start of this week. Soybeans and KC wheat futures, both of which were previously pursuing notable rallies, are now posting some of the most notable losses in the grains sector.

Other Markets:

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

Corn:

New crop December corn futures slipped below $4 Monday morning alongside broad commodity losses and antsy global equity markets -- the Federal Reserve could announce a bump in its target interest rate on Wednesday. Next week, we'll see the results of USDA's Prospective Plantings survey, which is widely expected to show an expansion of soybean acres at the expense of less-profitable corn in 2018. Trading volumes and speculative participation tends to build up in the trading sessions before that annual report, so expect to see an active corn futures market during the next two weeks. The DTN National Corn Index, an average of cash bids around the country, was $3.45 Friday, showing the national average basis level still at 38 cents under the May futures contract. At 8:00 a.m USDA reported 206,000 mt of corn sold to Japan for delivery in 2018-2019 and 115,000 mt of corn sold to unknown destinations for delivery in 2017-2018.

Soybeans:

Overnight Asian and European traders started the week with bearish concerns about global trade and how U.S. grains and oilseeds will fit into that picture, and soybean futures posted double-digit losses again. Weather for Brazil's ongoing soybean harvest is forecast to be generally favorable. Southern parts of that country have suffered similar drought conditions as Argentina, but in the main soybean-growing regions, harvest is more than halfway complete and the yields observed have been large enough to motivate private estimators to keep bumping up their production projections. Meanwhile, the Brazilian currency, the real, continues to weaken against the dollar -- another bearish influence on global soybean prices. The DTN National Soybean Index was $9.71 Friday, showing the national average basis bid stronger at 78 cents under the May futures contract.

Wheat:

For the Hard Red Winter wheat fields in the U.S. Southern Plains, it was a story of haves and have-nots over the weekend -- rain fell on some areas of relatively less concern, like Nebraska and eastern Kansas, but missed the regions experiencing exceptional drought. Meanwhile, winter wheat fields in other major northern hemisphere growing regions, like France and Russia, are doing just fine and there is little concern of any global wheat shortage. This is especially true for old crop soft wheat. Futures spreads between the May and July Chicago contracts have been growing wider (now 17 1/2 cents), reflecting a bearish commercial outlook about the near-term supply of feed wheat in this country. On Friday, the SRW Index was $4.35 or 33 cents under the May Chicago contract. Old crop Hard Red Winter wheat's cash bids averaged $4.57 or 43 cents under the May KC contract. Hard Red Spring wheat's cash index was at $5.92 and its average basis bid was 20 cents under the May Minneapolis contract.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

Follow Elaine Kub on Twitter @elainekub

(KR)

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