DTN Before The Bell Grains

Outlook Unshaken, Grain Prices Stabilize

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

Morning CME Globex Update:

After Thursday's volatility, the grain and oilseed markets seem to have found calm on Friday morning, and look set to post a mostly stable performance for the week. The weather forecast remains favorable for row crop harvest, and bushels will continue to be brought to market over the weekend.

Other Markets:

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

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Corn:

If nothing strange happens through the rest of Friday's trading session, the December corn contract might end the week with mild 3-cent losses, after having hit an eight-week high on Monday. That's an impressively stable performance for a week when over a billion bushels of corn were harvested out of muddy fields, and some of that may have been sold on spot contracts to meet farmers' near-term cash needs. The commercial outlook for storing corn through the next several months has been virtually unshakeable; the December-to-March futures spread was still trading at 12 cents per bushel during the overnight session. Basis, too, remains unshakeable. The DTN National Corn Index was $3.28 per bushel Thursday, showing national average basis steady at 42 cents under the December futures contract.

Soybeans:

Soybean futures are a penny higher at the start of Friday's trade, which isn't much in relation to Thursday's 22 1/4-cent losses. Soybeans, like corn, look on track to post small 3-cent losses for the week. Ostensibly, the poor export sales report on Thursday morning triggered the double-digit sell-off, but soybean traders will continue to shoot first and ask questions later, as long as the U.S.-China trade war persists and there are no negotiation meetings on the calendar. The Chinese soy industry continues to seek strategies to cut down on their dependence on imported soybeans. Scattered showers in the forecast across Central Brazil are favorable to the early part of their soybean-growing season. The nationwide average soybean basis bid strengthened again Thursday, and is now $1.00 under the November futures contract. The DTN National Soybean Index was therefore $7.64 per bushel. At 8 a.m., USDA reported cancellations of soybeans: 180,000mt to China and 120,000mt to unknown destinations, both for 2018-2019 marketing year.

Wheat:

U.S. wheat futures prices are mixed Friday morning, and international wheat prices similarly have no clear direction. The overnight trading volume was unusually light, however, so look for more confident trade to develop in one direction or another as the day wears on. The benchmark Chicago wheat contract remains locked in sideways consolidation between $5.05 and $5.35, and on track for nickel-sized losses at the end of this week. Perhaps the agricultural commodity futures were so quiet overnight because traders were too preoccupied with crude oil, the currency markets, and treasury futures, where trading volumes were aggressive early on Friday. The net result of that activity seemed to imply more slackening in U.S. 10-year interest rates and a lower U.S. Dollar Index Friday morning, which takes some pressure off dollar-denominated grain prices. DTN's collected SRW Index on Thursday was $4.74 per bushel (39 cents under the December Chicago futures contract); the HRW Index was $4.78 (37 cents under the December KC futures contract); and the Spring Wheat Index was $5.29 per bushel (stronger basis 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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Elaine Kub