DTN Before The Bell Grain Comments

Morning CME Globex Update:

A mostly neutral weekly export sales report should leave grains free to react to other factors, like the widespread buying mood that has boosted U.S. stocks, foreign stocks, the U.S. dollar, and many consumer commodities, including grains and oilseeds into the early part of Thursday morning.

Other Markets:

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

Corn:

As Thursday morning trade progresses, corn and other commodities that started the day higher may be in danger of getting dragged downward by a suddenly slipping crude oil market. But so far, the July corn contract appears content to linger quietly above $3.70. Export sales in feed grains have slowed week-to-week, with corn sales totaling only 457,200 metric tons in Thursday morning's report, and nothing for barley and net reductions for sorghum. Meanwhile, a strong stock market has become so commonplace, it almost slips past notice that the S&P 500 Index closed at a record-high closing price Wednesday, reaffirming investors' optimism about economic health, at least in the United States. Minutes from the latest Fed meeting suggest another interest rate rise could be coming next month. The DTN National Corn Index, an average of nearby cash bids around the country, came to $3.34 Wednesday, with the national average basis level steady at 37 cents under the July futures contract. Private exporters reported to the U.S. Department of Agriculture export sales of 115,400 metric tons of corn for delivery to unknown destinations during the 2016-17 marketing year.

Soybeans:

Thursday morning's export report showed the physical pace of soybean exports has slowed week-to-week and was down 32% from the prior four-week average, but net sales of 472,700 metric tons in the current marketing year should confirm traders' favorable view of export demand. That positive indicator would seem to line up with the lightly higher tone in the futures market Thursday morning; however, a quick look at the chart exposes a bearish threat to soybean prices. The continuous chart has trended lower through the month of May and now rests just above $9.50 per bushel, where it's in danger of falling through technical support at previously-tested lows. The DTN National Soybean Index was $8.81 Wednesday, with average soybean basis strengthening to 67 cents under the July futures contract. A generally dry weather forecast across the Midwest will help the planting and replanting effort for new-crop soybeans, but many farms certainly have reason to be concerned about stand losses and the ultimate yield impacts of a wet, challenging spring.

Wheat:

Wheat futures charts have been pursuing a short-term upward trend since last week, and gains of a few cents Thursday morning help to build on that momentum, but bearishly wide carry spreads should serve as a reminder that these markets must handle ponderous supplies in the last half of 2017. A weekly wheat export sales number of 201,900 metric tons may be viewed neutrally by the market. Recent rains have been favorable in almost all northern hemisphere grain-growing regions, from the U.S. Southern Plains to Turkey to Russia to China. In the nearby U.S. cash markets, all varieties of wheat experienced steady basis bids Wednesday: the SRW Index was $3.95 or 37 cents under the July Chicago contract, the HRW Index was $3.54 or 79 cents under the July KC contract, and the Spring Wheat Index was $5.21 or 40 cents under the July Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

Follow Elaineon Twitter @elainekub

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