DTN Before The Bell Grain Comments

Morning CME Globex Update:

Corn 2 lower. Soybeans 1 1/2 lower. Wheat 2 3/4 lower. Nearby soybean futures continue to hover on either side of $10.00. The lower U.S. Dollar Index Tuesday morning provided a direction for crude oil trade -- upward -- but grains haven't followed suit. Light losses were seen through the morning while corn, soybeans, and wheat struggle to find momentum.

Other Markets:

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

Corn:

An eroding U.S. Dollar Index, now below 100 points, should be supportive to grain prices and the commodity sector as a whole, but instead, corn futures contracts spent most of the morning posting light losses. Fund traders with fresh wealth created by the skyrocketing stock market could theoretically direct some of that capital into commodities, but so far it looks like when they do take an interest in corn, they do it by establishing new bearish short positions. Heavy selling on Monday caused the corn chart's nascent upward trend to reverse, and follow up losses Tuesday morning have taken the December corn contract as low as $3.85. In the cash corn market, the DTN National Corn Index, an average of cash bids around the country, came to $3.23 Monday, and the national average basis level strengthened to 40 cents under the May futures contract.

Soybeans:

Private estimates about the size of the soybean crop in Brazil have bearishly continued to trend toward USDA's huge number at 108 million metric tons. No matter where the final tally ends up, that record-large crop continues to justify the global soybean market's pursuit of a seasonally appropriate downtrend. During Tuesday morning's light trade, futures contracts in the soy complex were mixed, with soybean meal prices lightly lower and nearby soybean futures mostly steady and still hovering around the $10.00 level. With the Corn Belt's planting season somewhere on the horizon, the new crop soybean-to-corn price ratio is approximately 2.55-to-1, which favors soybeans but isn't far outside the statistically 'normal' expectations. In Monday's old crop cash market, national average soybean basis remained at 78 cents under the May futures contract, bringing the DTN National Soybean Index to $9.21.

Wheat:

DTN's meteorologists are calling for a "good chance for more significant rainfall" in their short- and medium-term forecasts that address wheat country in the Southern Plains. However, they warn that certain swaths of dry and droughty areas may be missed by the rain, and therefore the concern for the 2017 U.S. winter wheat crop can't completely be dismissed at this time. Wheat futures traded 1 to 3 cents lower through the early part of Tuesday's trading session. In the cash market Monday, winter wheat basis bids made small adjustments toward a more normal SRW-to-HRW relationship, with the SRW basis softening to 44 cents under the May Chicago contract (SRW Index at $3.87) and the HRW Index strengthening to 92 cents under the March Kansas City contract (HRW Index at $3.53). Spring wheat bids also strengthened, with the national average basis bid at 42 cents under the May Minneapolis futures contract and the national average price at $5.07.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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