DTN Before The Bell Grains

Morning CME Globex Update:

After sudden double-digit gains Monday, the soybean futures market is modestly pulling back the chart Tuesday morning and taking corn and wheat along with it. Nearby soybean meal futures have traded above $327 per ton. The outside markets, even crude oil, are in quiet consolidation so far this week despite ongoing geopolitical uncertainty.

Other Markets:

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

Corn:

December corn futures remained above $3.75 all throughout the overnight trading session, and although grains are broadly lower Tuesday morning, the corn chart has nevertheless staged an impressive seasonal rally, moving more than 33 cents above the low from mid-September. Dry skies in the weekly forecast for the Midwest and Northern Plains are enthusiastically welcomed by harvesters. The weekly Crop Progress report accurately reflected the near-standstill in row crop harvesting last week, with nationwide corn harvest advancing only 5 percentage points in the week leading up to Sunday. Nebraska, for instance, only advanced two percentage points, and South Dakota only inched forward one percentage point to 17. The DTN National Corn Index was $3.35 per bushel Monday, showing national average basis at 43 cents under the December futures contract. To put this in a favorable perspective, on this date in both 2017 and 2016, the NCI was $3.06 per bushel (showing the same 43 cents of basis under December futures).

Soybeans:

Sudden gains in soybean meal prices Monday morning have pushed the soy complex into relatively more volatile trade than it has experienced lately, although the November soybean contract is pulling back 8 cents Tuesday morning. The weekly export inspections report did show a vessel of soybeans loaded at Puget Sound and a vessel of soybeans loaded at the Gulf headed to mainland China, together equivalent to almost 5 million bushels, so yes, that trade route is technically still open; it's just being avoided as much as possible during the ongoing trade war and the 25 percent Chinese tariff on U.S. soybeans. The monthly NOPA crush report released Monday showed a very strong 160.8 million bushels of soybeans were crushed in September. The Brazilian real has remained strong over the past week (supportive to international soybean prices) but hasn't pushed to fresh highs recently. In the U.S. cash grain market, the nationwide average soybean basis is still historically weak at $1.02 under the November futures contract, putting the DTN National Soybean Index at $7.89 per bushel Monday afternoon.

Wheat:

Wheat futures have been guided by the day-to-day direction of the row crop markets so far this week and are posting light losses at the start of Tuesday's trading session. The December Minneapolis spring wheat contract was able to regain the $6.00 level in Monday's bullish surge and traded above the level again overnight. The opportunity to sell $6 spring wheat futures hadn't existed since August's wild wheat market. In the U.S. Southern Plains and southern Midwest, winter wheat planting has been seriously set back by recent rains (but no one is complaining much since the rain has widely eliminated drought conditions). The nationwide winter wheat planting progress (65 percent complete) fell behind the five-year average in this week's Crop Progress report. Emergence has been favorable in the wet conditions: 44 percent of the crop has come out of the ground, compared to a five-year average of 41 percent. DTN's collected SRW Index was $4.85 per bushel Monday (or 40 cents under the December Chicago futures contract); the HRW Index was $4.94 (38 cents under the December KC futures contract); and the Spring Wheat Index was $5.44 per bushel (57 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

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