DTN Before The Bell Grains

Morning CME Globex Update:

It's a full moon on Wednesday, and the market spooks and goblins are out in full force. Heavy volumes of activity were noted overnight in currencies, interest rate products, crude oil, cotton, and other consumer markets, but the grains and oilseeds have been largely unaffected. Instead, they continue to trade within consolidation ranges. Harvest weather and yield reports have been mostly neutral to prices this week.

Other Markets:

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

Corn:

At a different time of year, perhaps the big sell-off in global stocks this week would spill over into panicked liquidation in the grain markets, too, but for now, the corn market appears to be trading day-to-day based on weather and production expectations. Crude oil dropped 5 percent on Tuesday, demonstrating that macroeconomic concerns can indeed knock down consumer commodity prices. But, corn prices have been relatively calm and stayed inside a 2-cent trading range overnight. Light rain is expected to scatter across the Midwestern Corn Belt in the next few days, but the longer-term forecast calls for below normal precipitation, and no extended harvest delays are feared at this time. Anecdotal harvest yield reports don't suggest any reason not to expect the projected 14.8-billion-bushel crop. The DTN National Corn Index was $3.29 per bushel Tuesday, showing national average basis stronger at 41 cents under the December futures contract.

Soybeans:

Futures trade, especially in currency and interest rate products, has been active early Wednesday morning, but soybean prices haven't moved much, and the November contract is still more than 10 cents above its October low. 'Managed money' speculative traders were net-short in soybean futures and options in the most recent CFTC report, but not by a huge margin. Perhaps this helps to keep commodity futures prices relatively stable: if speculative liquidation is occurring, it may be occurring in both directions. A stronger dollar Wednesday morning is typically bearish to dollar-denominated commodities, especially for markets like the soybean market which is relatively dependent on exports. And the last time we checked, the U.S.-China trade war is still going on with no end in sight. The nationwide average soybean basis bid remained steady Tuesday at $1.00 under the November futures contract. The DTN National Soybean Index was therefore $7.57 per bushel.

Wheat:

Winter wheat planting has experienced a series of rain delays this year, and Kansas, for instance, was 13 percentage points behind its five-year average planting pace in this week's Crop Progress report. The Southern Plains are experiencing showers again on Wednesday, then their forecast calls for a few days of clear weather, then eventually Tropical Storm Willa is expected to come across Mexico and push more rain up into Texas. This isn't all bad for the HRW wheat region: drought is virtually gone from the plains (except for Colorado and New Mexico), and winter wheat emergence has looked favorable so far. Wheat futures prices are lower Wednesday morning, led by losses in the Chicago contract which may be more susceptible to outside market pressure. DTN's collected SRW Index on Friday was $4.71 per bushel (38 cents under the December Chicago futures contract); the HRW Index was $4.71 (36 cents under the December KC futures contract); and the Spring Wheat Index was $5.31 per bushel (stronger basis at 54 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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