DTN Before The Bell Grains

Soybeans Lead the Grains Higher

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

Morning CME Globex Update:

The outside markets are relatively quiet Thursday morning, allowing the soybean market to take the lead and express its optimism about export trades seen this week and a potentially big NOPA crush report to be released at 11 o'clock (Central) on Thursday.

Other Markets:

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

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Corn:

Stable outside markets are allowing row crop futures to pursue their own fundamental indications, and with U.S. corn harvest in its last tenth, nearby corn futures aren't seeing excessive selling pressure. It's not unusual to see the corn market stay stable or move higher through the last six weeks of the year while farmer bushels are tucked away in bins. Another burst of harvest-disrupting weather has popped up in the Eastern Corn Belt, including snow across Ohio Thursday, and similarly annoying weather conditions are forecast for the Northern Plains through the end of this week. Crude oil prices have stopped collapsing for the time being, anyway, and the U.S. dollar isn't pursuing fresh highs Thursday morning. The DTN National Corn Index was $3.34 per bushel Wednesday, showing national average basis stronger at 33 cents under the nearby futures contract.

Soybeans:

Soybean futures are 9 cents higher Thursday morning, and the front-month January contract has reached as high as $8.97 1/2, perhaps with tentative optimism about improvements in the otherwise dismal export scenario. The weekly export sales report is delayed until Friday morning, but Thursday's trading session will see the release of the monthly NOPA crush report, which is expected to show 170 million bushels of soybeans crushed in October, showing almost 10 million bushels of demand growth month-over-month since September. National average soybean basis bids have strengthened by 6 cents over the past week, as harvest draws to a close in many regions and after a few good chunks of export business were transacted, mostly for "unknown destinations." Diesel prices and barge freight prices continue to cheapen up. The DTN National Soybean Index was $7.92 per bushel Wednesday, putting national average basis at $0.92 under the January futures contract. Normal basis for this time of year would be more like $0.75 under futures, at least in comparison to values from the past two years, when there wasn't an ongoing trade war between the U.S. and China. The market is likely to stay off any fresh lows until at least November 30, when presidents of the two countries are expected to meet at the G20 Summit and potentially indicate some negotiations about that trade war.

Wheat:

Nearby Chicago wheat futures continue to bounce above $5.00 per bushel, and total open interest continues to fall in that market, suggesting more day-by-day short futures liquidation from speculative 'managed money' traders. Minneapolis wheat futures have mostly stayed in step with Chicago's neutral sideways path, but KC wheat futures have shed as much as 30 cents per bushel since last Monday. That's true even for the new crop July 2019 contract, showing that traders haven't worked up any bullish concern about lower planted HRW acreage during this wet, challenging fall planting season. Basis bids for all varieties of U.S. wheat strengthened across the countryside Wednesday: DTN's collected SRW Index was $4.72 per bushel (31 cents under the December Chicago futures contract); the HRW Index was $4.52 (29 cents under the December KC futures contract); and the Spring Wheat Index was $5.34 per bushel (42 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