DTN Before The Bell Grains

Morning CME Globex Update:

Most of the excitement in the commodity markets is focused on energy prices so far Tuesday with corn, soybeans, and wheat futures all languishing in lightly lower territory. However, the bulk of the day's business may take place later in the session.

Other Markets:

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

Corn:

The most that can be said for corn prices right now is that they are stable, unlike WTI crude oil, which has surged above $75 per barrel this week amid sanctions on Iran and plentiful demand in the newly optimistic North American economies. While RBOB gasoline and natural gas prices have followed along with crude's upward trend during September, ethanol futures have not, and the profitability of that industry continues to dwindle. Recent showers across the Midwest may have slowed down the 2018 corn harvest, but not by much: nationwide progress was pegged at 26% in the weekly Crop Progress report, or 9 percentage points higher than usual at this time of year. Although some farmers may be selling corn off the combine for cash needs, this is clearly not overwhelming the market with pressure. The nearby December futures contract remains within 4 cents of its pre-Grain-Stocks-report high from Friday. The DTN National Corn Index, an average of cash bids across the country, was $3.22 Monday or still 44 cents under the December futures contract.

Soybeans:

Soybean futures are a few cents lower early on Tuesday, moderating Monday's gains, and the November-to-March futures spread remains bearishly wide at 26 cents, reminding traders that the industry is bracing to store large soybean inventories for many months during an ongoing trade war with China. However, very active futures trading activity was noted Monday after 8 a.m. and we may watch for subsequent export sales announcements in coming days. Physical soybean purchases Monday morning would have been well-timed to take advantage of the previous week's inventory bearishness. Condition ratings for the 77% of soybean fields that remained unharvested by Sunday night remained steady from week to week, with 68% still considered good to excellent. Soybean harvest progress advanced 9 percentage points to 23% complete. Canola harvest in the western Canadian Prairies, however, it has been severely challenged by recent wet weather, with a cold but dry forecast in store for the rest of this week. In the U.S. cash market for soybeans, the DTN National Soybean Index was boosted 8 cents by Monday's futures gains and landed at $7.52 per bushel.

Wheat:

Wheat futures across the globe are at a near-standstill Tuesday, with one exception being the Minneapolis spring wheat market, which is posting small morning gains again amid persistent concerns about the late Canadian harvest. These gains aren't large enough to counteract the short-term lower trend that has appeared on the December chart, and the contract remains 12 cents below the $5.90 level reached two weeks ago. The outside markets aren't particularly friendly to U.S. grain futures Tuesday. Although there is excitement about better consumer demand apparent in the higher crude oil prices, and the stock market is within striking distance of a fresh record high, the U.S. Dollar Index has also been streaking higher and is adding on more gains Tuesday morning. This tends to put pressure on dollar-denominated commodity prices. DTN's collected SRW Index was $4.69 Monday; the HRW Index was $4.74; and the Spring Wheat Index was $5.21 per bushel.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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