DTN Before The Bell Grains

Snow is Falling; Grain Prices are Rising

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

Morning CME Globex Update:

Weekly export sales results showed 701,500 metric tons of corn, 388,400 metric tons of soybeans, and 661,200 metric tons of wheat. Corn, soybean, and wheat prices are expected to linger mostly sideways ahead of Thursday's monthly release of USDA supply-and-demand estimates.

Other Markets:

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

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Corn:

Corn prices haven't budged more than a penny per day so far this week, but there will be a possibility for grain market volatility on Thursday when USDA releases its monthly round of supply-and-demand estimates (due at 11 o'clock Central). Open interest in corn futures has been steady or diminishing in recent days, so there may not be as much speculative fervor about this November crop report as we sometimes see after other reports. Ethanol production continues to zoom along at more than 1 million barrels per day, and the weekly export sales report showed a strong but unsurprising 701,500 metric tons of corn sales in the week leading up to November 1, with Japan and Mexico the leading buyers. The DTN National Corn Index was $3.36 per bushel Wednesday, showing national average basis steady at 36 cents under the December futures contract.

Soybeans:

The Western Corn Belt and Southern Plains are experiencing rain and snow Thursday, which is extremely unhelpful for the third-or-so of soybean fields still waiting to be harvested in Kansas. Nationwide soybean harvest progress was 6 percentage points behind its average pace in the latest Crop Progress report, and there have been rain delays just about everywhere at some point this year. So analysts polled ahead of Thursday's WASDE report were expecting, on aggregate, to see a slightly reduced soybean production estimate from USDA. Expectations are sometimes unmet, however, so be prepared for market volatility Thursday. The weekly export sales report was again bearish for soybeans, showing only 388,400 metric tons of sales. There were 249 issues and stops of expiring November futures contracts. The DTN National Soybean Index was $7.81 per bushel Wednesday, showing national average basis stronger again at $0.98 under the January futures contract. At this time last year, national average basis was $0.80 under January futures, suggesting today's physical soybean market is still experiencing unusual bearishness due to the U.S.-China trade war.

Wheat:

Weekly export sales for wheat, at 661,200 metric tons in Thursday morning's report, show a bearish overall pace, but the demand for hard red spring wheat may be viewed favorably by the market at a time of year when the U.S. is eager to win global business. Minneapolis wheat futures are up 4 cents. Meanwhile, speculative 'managed money' traders have been bearishly net-short in Chicago wheat futures, holding about 1.6 short contracts for every 1 long contract, so if any particularly bullish adjustments are made to the global supply-and-demand tables, prices could suddenly pop amid short-covering. Potentially bullish adjustments could include lower Australian wheat production or lower Russian wheat exports, but these may be outweighed by the overall bearishness of global inventories. DTN's collected SRW Index on Wednesday was $4.78 per bushel (32 cents under the December Chicago futures contract); the HRW Index was $4.70 (32 cents under the December KC futures contract); and the Spring Wheat Index was $5.35 per bushel (46 cents under the December Minneapolis futures contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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Elaine Kub