DTN Before The Bell Grains

Soybeans Trim Recent Gains

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

Morning CME Globex Update:

Outside markets are showing significantly more enthusiasm than corn, soybeans or wheat futures, which are all generally pulling away from the week's overall direction. U.S. stock markets are expected to pursue another fresh record high on Friday.

Other Markets:

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

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

Corn:

At this point in the year, we can no longer say "rain makes grain" and instead acknowledge that localized flooding in the Western Corn Belt only trims the overall U.S. output. December corn futures are keeping well off this week's contract low Friday morning. The weekend forecast may be mostly dry across the Corn Belt, but more scatterings of showers and thunderstorms are expected next week, which could slow down the harvest of the projected 14.8-billion bushel crop and thus, slow down the potential harvest selling pressure. Some of the recent heavy rain events were problematic for ultimate corn production, with flooding noted in parts of Iowa, Minnesota and southeast South Dakota. Friday afternoon's Cattle on Feed report is expected to show 105.5% as many cattle in feedlots on Sept. 1, 2018, as there were a year ago. If the corn futures market can hold on to the light gains it's making Friday morning, then when cash grain merchandisers go to pre-hedge their weekend purchases, they may find the December contract roughly 3 cents higher than it was last week. Basis bids have held steady through that timeframe, and the DTN National Corn Index was $3.09 Thursday, showing the national average basis bid at 44 cents under the December futures contract Friday, USDA reported and export sale of 121,700 metric tons of corn sold to unknown for delivery in the 2018-19 marketing year.

Soybeans:

Soybean futures are lower in active trade Friday morning. Several markets made gains on Thursday, and not just mild ones. U.S. stock prices, for instance, posted big, manic upward jumps to record-high levels leaving gaps on their chart. In that context, and in considering the Friday morning pullback, Thursday's double-digit gains in soybeans may seem less influential. They also may have been rumor-driven. There are swirling ideas that China might possibly reduce some of its import tariffs on some products from some countries someday soon, but there have been no official details given about this, and U.S. soybeans could be left out entirely. In any case, if that's what sparked Thursday's buying spree, it was a demonstration of how eager the soybean market would be to leave these low prices behind if the U.S.-China trade war would ever get resolved. Cash buyers of soybeans were much less excitable Thursday, still bidding a very weak average basis of $1.03 under the November futures contract, putting the DTN National Soybean Index at $7.47 per bushel. USDA reported export sales of 100,000 mt of soymeal sold to unknown for delivery in the 2018-19 marketing year.

Wheat:

Losses ranged anywhere from a penny to a nickel during the overnight trading of U.S. wheat futures, with the Chicago contracts experiencing the focus of speculative selling activity. The December Chicago wheat contract is nevertheless on track to post 10-cent gains for the week after last weekend's frost event in Western Australia gave the global wheat supply outlook just one more in a series of supply shocks. The rainy forecast that may hold up row-crop harvest in the U.S. Southern Plains may also delay some winter wheat planting intentions next week. In the cash wheat market, DTN's collected SRW Index was $4.78 Thursday, (average basis stronger at 46 cents under the December Chicago futures contract); the HRW Index was $4.86 (steady at 41 cents under the December KC contract); and the Spring Wheat Index was $5.25 (weaker at 63 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine 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