DTN Before The Bell Grain Comments

Morning CME Globex Update:

Corn 2 higher. Soybeans 4 higher. Wheat 2 3/4 higher. Trading volume has so far been extremely light, leaving the day's direction still to be established. Outside markets are showing stability across the board, although it may simply be the calm before a storm. Light gains overnight in corn, soybeans, and wheat demonstrate that the default direction is upward to follow these markets' recent short-term higher trends.

Other Markets:

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

Corn:

Corn futures trade has been mostly higher but extremely light in volume so far, and it may take traders some time through Monday morning for the market to fully reflect the outside influences that weigh on it. There has been doubt over the past week that the crude oil market, below $49, has corrected enough to reflect the heavy worldwide oversupply. On Monday, it looks like global traders want to take that market downward some more, and that bearishness could spill over into other commodities. The corn chart itself looks inclined to post a short-term higher trend, but would struggle to gain more than a dime without encountering pressure around $3.80. In the cash corn market, the DTN National Corn Index, an average of cash bids around the country, came to $3.27 Friday, and the national average basis level remained steady at 41 cents under the May futures contract. At 8 a.m. USDA reported 132,000 mt of corn sold to South Korea for delivery in 2016-2017.

Soybeans:

The Malaysian palm oil market, a leader of the day-to-day direction of oilseed trade, has flatlined in recent weeks, and soybean oil similarly has stabilized above 32 cents. Nearby soybean futures, with 4-cent gains at the start of Monday's trade, are peeking their head back above the psychologically-significant $10.00 level. New crop November futures also traded briefly above the $10.00 level overnight. With the annual Prospective Plantings report looming in two weeks, the new crop soybean-to-corn price ratio is hovering around 2.55-to-1, which favors soybeans but isn't far outside the statistically 'normal' expectations. National average basis came to 78 cents under the May futures contract Friday, causing the DTN National Soybean Index to dip to $9.22, and if new crop futures continue to erode in a similar fashion, it won't be very long before some U.S. farmers could lose the opportunity to pre-harvest sell 2017 cash soybeans with a $9 handle on them.

Wheat:

U.S. wheat prices have generally been on an upward trajectory since late 2016, but without much of a bullish fundamental story to justify or boost that movement. Spring officially begins today, and the drought monitor does show broad patches of dry or droughty conditions covering most of the areas where winter wheat crops are growing. Farmers in those areas are doing fieldwork in preparation for row crop planting, and wheat prices will need to stay in step with corn and soybeans if the market wants to prevent farmers from being tempted to abandon wheat acres. Winter wheat basis bids remained steady Friday, with the SRW Index at $3.93 or 43 cents under the May Chicago contract; and the HRW Index at $3.61 or 93 cents under the March Kansas City contract. Spring wheat bids were also steady as the market reasserted some bullishness, with the national average price at $5.08 and the national average basis bid at 42 cents under the May Minneapolis futures contract.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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