DTN Early Word Grains
Grains Start Higher, Other Commodities Red
December corn was up 2 cents, November soybeans were up 4 1/4 cents, and September Kansas City (HRW) wheat was up 4 1/2 cents.
CME Globex Recap:Once again, outside stock markets are mixed to a little higher and Treasury yields are roughly unchanged early Wednesday. This time however, the U.S. dollar index is higher after Federal Reserve Chairman Powell told the Senate Tuesday that the Fed remains committed to gradual rate hikes. Most commodities outside of grains are trading lower while grains themselves, are starting higher.
OUTSIDE MARKETS:Previous closes on Tuesday showed the Dow Jones Industrial Average up 55.53 points at 25,119.89 and the S&P 500 up 11.12 points at 2,809.55 while the 10-year Treasury yield ended at 2.86%. Early Wednesday, DJIA futures were up 2 points. Asian markets are mixed with Japan's Nikkei 225 up 96.83 (0.4%) and China's Shanghai Composite down 10.87 (-0.4%). European markets are higher with London's FTSE 100 up 45.30 points (0.6%), Germany's DAX up 99.69 points (0.8%), and France's CAC 40 up 28.96 points (0.5%). The euro was down .0043 and the U.S. dollar index was up 0.31 at 95.29. September 30-year T-Bonds were up 3/32nds while August gold was down $4.70 at $1,222.60 and August crude oil was down $0.52 at $67.56. Soybeans on China's Dalian Exchange were roughly steady and Malaysian palm oil futures were up 1.8%.
| BULL | BEAR | ||
| 1) | USDA's lower crop ratings for corn and soybeans on Monday have caused shorts to back off. | 1) | Even though USDA's crop ratings for row crops dropped on Monday, they are still higher than a year ago. |
| 2) | Commercials are net long soybeans, soybean oil, and Minneapolis wheat -- three commodities that have gotten cheap. | 2) | Fed Chairman Powell remains committed to gradual rate hikes in spite of trade policy concerns. |
| 3) | Chicago and K.C. wheat continue to hold above their 2018 lows. | 3) | Downtrends remain in effect for corn, the soy complex, and all three wheats. |
CORN December corn is up 2 cents early with South Dakota expecting rain Wednesday, moving to the north-central Corn Belt and then to the eastern Midwest the next few days. Seven-day rain coverage is expected to reach all, but the southwestern Corn Belt where conditions remain chronically dry. Monday's drop in corn's good to excellent rating from 75% to 72% was not catastrophic, but did change the short-term momentum and lead to some short-covering after the market's mood has been bearish for so long. Weather is still in charge of how this crop turns out and the concerns so far have been dry conditions in the southwestern Corn Belt and too much rain around northwestern Iowa. On the demand side, corn shipments need to pick up the next six weeks if USDA's export estimate is going to be reached. Technically, the trend in corn remains down, but the low of $3.50 in December corn may have been cheap enough to gather support. USDA's outlook for lower world corn supplies in 2018-19 remains one factor that could help prices find support above last year's lows.
SOYBEANS November soybeans are up 4 1/4 cents early Wednesday, making a bid for a third consecutive day higher after Friday's prices closed at their lowest level for the November contract in over nine years. Even with the U.S. threatening another $200 billion of tariffs against China, last week's low of $8.26 is fairly cheap for soybeans and has drawn attention from commercials and traders, helped by a small drop in USDA's good-to-excellent rating for soybeans, to 69%. A modest decline in the crop rating in July is not exactly bullish news, but it has reminded the market that weather is still a risk with pod-setting still ahead. At this point, the U.S. soybean crop may fall short of a sixth consecutive increase, but it could still be close to last year's record high 4.25 billion bushels. Aside from weather, soybean prices are cheap and commercials are net long. The trend in soybeans remains down with the seasonal low not due until early October.
WHEAT September K.C. wheat is up 4 1/2 cents early, staying below the $5.00 mark, but also holding stubbornly above its 2018 low of $4.66 1/2. There are some areas of spotty showers in the western Plains early Wednesday, but nothing serious in the way of the winter wheat harvest. The seven-day forecast expects rain to help spring wheat crops in the northwestern Plains and Canadian Prairie, but will miss the Pacific Northwest and Montana. Overall, USDA is expecting world wheat production to be down 3% in 2018 and the ending stocks-to-use ratio for major exporters is expected to fall to its lowest level since 2012. However, a U.S. ending stocks estimate of 985 million bushels for 2018-19 is enough to damper any supply concerns for the rest of 2018, unless of course, this year's weather has any surprises left. For now, the trends remain down for all three wheats while September Chicago and K.C. wheat are holding stubbornly above their 2018 lows -- signs of possible support.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.15 | -$0.01 | -$0.31 | Sep | -$0.055 |
| Soybeans: | $7.79 | $0.10 | -$0.60 | Aug | -$0.003 |
| SRW Wheat: | $4.72 | $0.09 | -$0.26 | Sep | -$0.004 |
| HRW Wheat: | $4.76 | $0.06 | -$0.15 | Sep | -$0.003 |
| HRS Wheat: | $5.05 | $0.05 | -$0.28 | Sep | -$0.002 |
Todd Hultman can be reached at todd.hultman@dtn.com
Todd can be followed throughout the day on Twitter @ToddHultman1
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