DTN Early Word Grains
Plenty of Bearish Influence Early Monday
December corn was down 3 3/4 cents, November soybeans were down 8 1/2 cents, and September Chicago wheat was down 7 1/2 cents.
CME Globex Recap:Stock markets are starting lower Monday with investors especially shunning emerging markets while concerns about debt exposure to Turkey increase. The September U.S. dollar index is fairly quiet, trading up 0.07 while most commodities are trading lower. Grains are starting lower with influence still coming from Friday's bearish USDA estimates.
OUTSIDE MARKETS:Previous closes on Friday showed the Dow Jones Industrial Average down 196.09 points at 25,313.14 and the S&P 500 down 20.30 points at 2,833.28 while the 10-year Treasury yield ended at 2.86%. Early Monday, DJIA futures were down 81 points. Asian markets are lower with Japan's Nikkei 225 down 440.65 (-2.0%) and China's Shanghai Composite down 9.44 (-0.3%). European markets are also lower with London's FTSE 100 down 35.55 points (-0.5%), Germany's DAX down 54.19 points (-0.4%), and France's CAC 40 down 13.68 points (-0.3%). The euro was down .0014 and the U.S. dollar index was up 0.15 at 96.41. September 30-year T-Bonds were down 9/32nds while December gold was down $8.30 at $1,210.70 and September crude oil was up $0.02 at $67.65. Soybeans on China's Dalian Exchange were steady to higher and Malaysian palm oil futures were down 1.6%.
| BULL | BEAR | ||
| 1) | IGC and USDA both estimate significant reductions in exportable world ending stocks of corn and wheat in 2018-19. | 1) | USDA estimated a record U.S. soybean crop and record corn yield on Friday |
| 2) | Still looking at a mostly dry seven-day forecast for the northwestern U.S. and western Canadian Prairie. | 2) | Futures spreads suggest bearish near-term demand for corn, soybeans, and all three wheats. |
| 3) | USDA estimated a 4% reduction in 2018-19 world wheat production in Friday's WASDE report. | 3) | China's 25% soybean tariff and ongoing trade war show no sign of letting up yet. |
CORN December corn is down 3 3/4 cents early Monday, still pressured by Friday's USDA estimate of a 14.59 billion bushel crop in 2018 and also by a seven-day forecast that expects broad rain coverage across the Midwest, except for the northernmost states. Globally, USDA expects ending corn stocks to be down 20% in 2018-19, which at this point, is the one bullish factor that should help give corn prices support. Between now and harvest however, it is going to be difficult for December corn to trade significantly higher, especially if the weather stays generally cooperative. With a large fall crop expected, December corn is under pressure, trading in a wide sideways range.
SOYBEANS November soybeans are down 8 1/2 cents early Friday, still getting beat up by USDA's estimate of a record high 4.59 billion bushel crop for 2018. As with corn, the seven-day outlook is also favorable with a broad coverage of rain expected across the Midwest, with heavy amounts in Kansas and Oklahoma. North Dakota and Minnesota will be missed, connected to the dry trend we have seen in the northwestern U.S. There is still a level of uncertainty in Friday's crop estimate, but it is difficult to make a bullish argument for soybean prices when the weather has been mostly favorable for the largest producing soybean states. On top of all that is a stalemate with China while they hold a 25% tariff against U.S. soybeans. The trend in November soybeans is currently sideways with prices near their lowest level in nine years. Prices remain vulnerable to unexpected changes in trade policy with China.
WHEAT September Chicago wheat is down 7 1/2 cents early Monday, influenced by the lower start in row crop prices and Europe's early lower prices for milling wheat, down 1.4% in the December contract. There may also still be some disappointment that USDA did not make bigger reductions in Friday's crop estimates. USDA has world wheat production down 4% in 2018-19 and the International Grains Council has production down 5% so there is still room for negotiation while dry weather remains a concern. Here in the northwestern U.S. and western Canadian Prairie, the seven-day forecast remains dry with risk of wildfires. USDA kept its estimate of other spring wheat unchanged at 614 million bushels, but that could be trimmed later. Even though winter wheat prices have pulled back from their 2018 highs, the trends for all three wheats remain up.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.26 | -$0.12 | -$0.32 | Sep | -$0.004 |
| Soybeans: | $7.81 | -$0.43 | -$0.81 | Nov | -$0.004 |
| SRW Wheat: | $5.18 | -$0.18 | -$0.29 | Sep | $0.000 |
| HRW Wheat: | $5.40 | -$0.19 | -$0.20 | Sep | -$0.001 |
| HRS Wheat: | $5.60 | -$0.21 | -$0.49 | 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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