DTN Before The Bell Grains

Morning CME Globex Update:

The dollar is higher, and a broad selection of other markets are posting losses Wednesday morning: from grains and oilseeds to cotton, crude oil, and stock market futures. There will be potential for outside market volatility Wednesday afternoon after the Federal Reserve releases minutes from its latest meeting and traders parse that discussion for hints of future interest rate rises.

Other Markets:

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

Corn:

December corn futures stayed inside a 2 1/2-cent trading range throughout the overnight and early part of Wednesday's trade. The futures price itself has gained roughly 6 cents per bushel since the start of the month, but the nearby futures spread between the December 2018 and March 2019 contracts has remained immovably wide at 12 cents. This suggests the commercial grain industry is still expecting a 14.8-billion-bushel crop to be handled in coming months. As dry weather stretches over most of the Corn Belt this week, those grain companies will likely see large quantities of corn bushels arriving at the elevator doors. After the recent stretch of wet weather, grain graders will be on the lookout for various varieties of mold damage, but overall yield losses aren't expected to be reflected on the global supply and demand tables. The DTN National Corn Index was $3.33 per bushel Tuesday, showing national average basis stronger at 42 cents under the December futures contract.

Soybeans:

Very light volumes of futures trade were noted in soybeans and other agricultural markets Wednesday morning, and soybean prices were lightly lower. The January soybean contract, which had rushed above the $9.00 level earlier this week, is now back below that psychologically-significant mark again. January Malaysian palm oil futures surged higher Wednesday, but that market may be playing catch-up with U.S. soybean oil and not leading the global oilseed complex with fresh momentum. In the U.S. cash grain market, the nationwide average soybean basis strengthened slightly in addition to the futures markets gains so far this week. Nevertheless, it's still historically weak at $1.01 under the November futures contract, putting the DTN National Soybean Index at $7.83 per bushel Tuesday afternoon.

Wheat:

Wheat futures prices are lower Wednesday morning, led by losses in the ICE UK feed wheat market (which would be equivalent to 12 cents per bushel if converted to U.S. units). Losses in the KC and Chicago wheat markets are milder: 6 to 7 cents at the start of Wednesday morning. The U.S. Dollar Index is heading upward, which traditionally puts pressure on dollar-denominated commodity prices. The stock market on Tuesday recovered a portion of its recent panicky losses, but additional bearish caution will be taken Wednesday morning. Traders will frantically scan the Federal Reserve's meeting minutes when they are released Wednesday at 1 o'clock (Central). Treasury futures are so far quiet Wednesday morning, but any hints of higher interest rates can reverberate throughout the markets. Agriculture, too, is affected when 10-year interest rates jump by 0.1 or 0.2 of a percentage point, as they have done this month. DTN's collected SRW Index was $4.84 per bushel Tuesday (or 39 cents under the December Chicago futures contract); the HRW Index was $4.91 (steady basis at 38 cents under the December KC futures contract); and the Spring Wheat Index was $5.39 per bushel (steady at 57 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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