DTN Before The Bell Grains

Morning CME Globex Update:

Concerns about the late and challenging harvest in the northwestern Canadian Prairies are allowing Minneapolis spring wheat to hold on to gains while the rest of the global wheat sector continues to sink. News about a re-vamped and re-named North American Free Trade Agreement is positive for the three economies' trade outlook, and is thus boosting the Canadian dollar, the Mexican peso and U.S. corn and stock prices.

Other Markets:

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

Corn:

Corn futures are two cents higher Monday morning and the Canadian dollar has jumped higher by almost 2% since Thursday close, after intense weekend negotiations led to a Sunday night approval of a new NAFTA trade agreement (under a new name: USMCA). Canada is the biggest customer of U.S. agricultural exports, but mostly of meat, fresh fruits and vegetables, and other random products. They generally supply their own feed grains, and U.S. corn futures have no reason to get too exuberant about this news. The overnight trading range was barely more than 2 cents wide. Bearishness may still be left over from Friday's Grain Stocks report, which showed only 3.16 billion bushels (bb) of quarterly corn disappearance (evidence of less demand than traders were expecting to see). The DTN National Corn Index, an average of cash bids across the country, was $3.13 Friday or still 44 cents under the December futures contract.

Soybeans:

The soybean futures market is still feeling the bearishness of Friday's Grain Stocks report, which showed a 45% year-over-year increase in ending stocks, as 438 million bushels (mb) still sat unused on Sept. 1, mostly in commercial elevators and especially in Pacific Northwest feeder states, which have virtually nowhere to ship their soybeans amid the ongoing trade war with China. For instance, Nebraska's off-farm Sept. 1 soybean inventories nearly doubled from 2017 to 2018. Scattered showers across the Midwest have been disruptive to row-crop harvest and will continue to be disruptive in the near-term forecast, as could be noted in Monday afternoon's upcoming Crop Progress report. The average cash bid for soybeans is $1.02 under the November futures contract, which is a slight blip stronger than where countryside basis had been lingering for over a week. Time will tell if the stronger river market is feeding through to spark better competition in the countryside, or if perhaps the most-dire anticipations of this large crop's harvest will eventually wane. The DTN National Soybean Index was $7.44 Friday.

Wheat:

Wheat futures are mixed at the start of the week's trade but could eventually succumb to the short-term downward trend noted in recent sessions. The Canadian Prairies experienced a cold but mostly dry weekend, which should have aided harvest for the last half of spring wheat fields. They've had a long and challenging harvest, and moisture concerns will eventually turn to quality concerns, so the Minneapolis spring wheat futures contract is expressing some risk premium Monday morning. Only 35% of Alberta's spring wheat was harvested as of Sept. 25, far behind the usual progress by this time. In addition to the NAFTA-by-another-name news Sunday night, the U.S. Farm Bill was also allowed to expire due to inaction by the U.S. Senate, but most programs remain temporarily funded and this has little effect on futures market prices for grain. DTN's collected SRW Index was $4.66 Friday, (average basis steady at 43 cents under the December Chicago futures contract); the HRW Index was $4.72 (stronger at 39 cents under the December KC contract); and the Spring Wheat Index was $5.12 (steady at 61 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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