DTN Before The Bell Grains

Morning CME Globex Update:

Morning CME Globex Update: Corn and soybeans should both still be considered in a seasonal down trend, and wheat, too, succumbed to lower prices Thursday morning. The sharply lower U.S. Dollar Index occurs amid emerging market volatility and so far hasn't been priced into commodity values. The weekly export sales report showed 1,383,700 metric tons of 2018/19 corn sales, 917,600 metric tons of soybean sales, and 468,400 metric tons of wheat sales.

Other Markets:

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

Corn:

The corn market has managed to hold on to the slight gains posted overnight, and the lower U.S. dollar and stronger energy prices could continue to support grain prices Thursday. The weekly export sales number was also bullish for the corn market: 1,383,700 metric tons. Eventually, however, we should expect to see the front-month December corn futures contract retest Tuesday's contract low at $3.42 1/2 amid the day-to-day pressure of new-crop bushels being harvested. These early bushels being brought into elevators this week are likely already priced and therefore don't spark additional futures-selling activity. Furthermore, rain across the Midwest and the Southern Plains is slowing down row-crop harvest for the next few days. The DTN National Corn Index was $3.01 Wednesday, showing the national average basis steady at 44 cents under the December futures contract.

Soybeans:

Soybean futures were lower through most of the overnight session, but the surprisingly strong export sales number Thursday morning boosted a little bit of buying interest. The U.S. sold 917,600 metric tons of soybeans in the week leading up to September 13, which beat traders' expectations but is nevertheless a bearish overall pace considering how many soybeans there are to be moved. The EU has made good on its promise to buy more U.S. soybeans, with more than half of their purchases over the past three months coming from the U.S. instead of Brazil. The presidential election in Brazil approaches in October, as does the busiest rush of soybean planting season (just starting), but for now their currency is remaining stable. In the U.S., national average soybean basis weakened even further Wednesday, with the average country bid now $1.03 under the November futures contract. That puts the flat price bid to farmers anywhere from $6.30 (in northwestern portions of the Corn Belt) to $7.60 per bushel (closer to Midwestern processors and the Mississippi River). Physically, soybeans in the Western Corn Belt still have nowhere to go during the U.S.-China trade war, and merchandisers throughout the industry are anticipating large inventories of soybeans that will need to be stored for many months. The November-to-March 2019 soybean futures spread offers 27 1/2 cents of carry Thursday morning.

Wheat:

The rebound in wheat prices seems to be pausing Thursday morning. Australian wheat prices have gained 8 AUD per metric ton (equivalent to 16 U.S. cents per bushel) in the days since the weekend frost damaged their otherwise thriving Western Australia winter wheat crop. Gains across the globe, including for Chicago, KC, and Minneapolis wheat futures, have been similar in size or even larger, although the volume of speculative trading interest following this headline hasn't been especially eager. This week's export sales report backed up the idea that U.S. wheat is attractive to the world market: the 468,400 metric tons of sales reported showed a bearish overall pace but were at the high end of expectations and a significant improvement over recent weeks' performances. In the cash wheat market, DTN's collected SRW Index was $4.76 Wednesday, (average basis steady at 47 cents under the December Chicago futures contract); the HRW Index was $4.85 (steady at 41 cents under the December KC contract); and the Spring Wheat Index was $5.26 (stronger at 62 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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