DTN Before The Bell Grain Comments

Morning CME Globex Update:

Corn 1 3/4 higher. Soybeans 3 1/4 higher. Chicago wheat 2 higher. Futures for the hard wheat varieties and most other commodities are also higher. Outside markets should be supportive to lightly higher grain futures prices Wednesday, with stock traders expressing optimism about the global economy and crude oil trending upward above $51 per barrel. Grain and oilseed futures are experiencing light trading volumes, but are mostly higher alongside crude oil.

Other Markets:

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

Corn:

Overnight, the corn chart never budged more than 2 cents in either direction, and although it's likely to experience relatively more action as the day progresses, the corn chart remains trapped in a sideways pattern. As rain clouds pass across much of the Corn Belt and sunshine follows, hundreds of millions of little corn plants will be actively growing, busily working toward producing a 14 billion bushel crop. The anticipation of this crop has kept a lid on the new crop December corn futures contract, which for the past eleven weeks hasn't been able to trade higher than $3.95 3/4, and doesn't appear likely to mount a challenge this Wednesday. In outside markets, live cattle contracts are trending back upward toward their May highs, which could add some positive sentiment to feed grain prices. The DTN National Corn Index, an average of nearby cash bids around the country, came to $3.33 Tuesday, with the national average basis level steady at 37 cents under the July futures contract.

Soybeans:

The Brazilian currency experienced another dip overnight, driving some bearish trade in the soybean futures market, which was the only grain or oilseed market posting light losses at the start of Wednesday's session. The real has recovered since then, and with it, Chicago soybean futures. The nearby July futures contract could soon be in danger of falling through technical support at its previous April low of $9.41 1/4. Considering how many short positions have already been built up by speculative traders, there may not be a huge cloud of sell orders waiting to be triggered at that level, but on the other hand, without many definitively bullish news stories out there for soybeans, additional fund selling could occur at any price level. The DTN National Soybean Index was $8.81 Tuesday, with average soybean basis remaining steady at 68 cents under the July futures contract.

Wheat:

Carry spreads in the KC wheat market are currently trading as wide as they have ever been this year, suggesting that commercial traders feel growing confidence that they will have a huge Hard Red Winter wheat crop to store during the last half of 2017 ... and growing concern about where they're going to find space to store it. The KC July-to-September spread extended as wide as 18 cents overnight, and the July-to-December spread similarly offers nearly 9 cents per bushel per month. Carry spreads for Soft Red Winter wheat are also bearish -- over 7 cents per bushel per month of storage -- and it's not just in the U.S. that wheat crops are expected to do well in 2017. Recent rains have been favorable in other northern hemisphere grain-growing regions, from Turkey to Russia to China. In the nearby U.S. cash markets, all varieties of wheat experienced stronger cash bids Tuesday, with average basis levels tightening by one penny: the SRW Index was $3.92 or 37 cents under the July Chicago contract, the HRW Index was $3.51 or 79 cents under the July KC contract, and the Spring Wheat Index was $5.14 or 40 cents under the July Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

Follow Elaineon Twitter @elainekub

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