DTN Before The Bell Grain Comments

Morning CME Globex Update:

Corn 1 1/2 lower. Soybeans 2 higher. Chicago wheat 2 1/2 lower. Minneapolis spring wheat continues to trend higher. Most markets across the globe are quiet and stable Friday morning, although the potential exists for volatility in grain trade once USDA releases its monthly Supply and Demand Estimates.

Other Markets:

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

Corn:

Corn prices are lightly lower Friday morning, although if weather was the corn market's only topic of interest, the mood would probably still be as consistently bullish as it has been all week. The weekly Drought Monitor showed expanding areas of dryness, not just in the Dakotas and the Southern Plains states, but also in the heart of the Corn Belt, right before a June weekend that is forecast to experience some potential triple-digit temperatures in Iowa. But instead, the corn market's main concern Friday morning will be USDA's monthly Supply and Demand Estimates, released at 11 o'clock Central. Futures trade will likely continue to be quiet until then. Traders, on average, are expecting to see the nationwide corn production estimate reduced somewhat, but to still see it above 14 billion bushels. The DTN National Corn Index, an average of nearby cash bids around the country, came to $3.46 Thursday, with the national average basis level steady at 40 cents under the July futures contract.

Soybeans:

Soybean futures have the potential for volatile movement through Friday's session if USDA's monthly Supply and Demand estimates finally boost the 2016-17 export projection or trim the 2017-18 production estimate in a sudden fashion. So far this week, the new crop November contract has gained an impressive 19 cents but still remains 35 cents below its May high at $9.80. Despite Theresa May's Tories losing their parliamentary majority in Great Britain's election yesterday, global stock markets have remained unwaveringly strong, with the FTSE and DAX indices both posting gains Friday. The U.S. Dollar Index is significantly higher Friday morning, a factor which traditionally weighs on commodity futures prices, and indeed, crude oil is trading lower and most commodity futures markets are following along for now. The DTN National Soybean Index was $8.73 Thursday, with average soybean basis strengthening to 65 cents under the July futures contract. At 8 a.m. USDA reported 201,000 mt of soybeans sold to Unknown for delivery in 2016-2017.

Wheat:

It gets drier and drier in the Dakotas and across the spring wheat-growing regions of the Northern Plains, and there is still no sure relief in the precipitation forecast, and therefore, Minneapolis spring wheat futures continue to build up risk premium and serve as the leaders of any day-to-day weather rally in the grain futures markets. The front-month July Minneapolis contract has gained nearly 70 cents over the past four weeks. Decisions being made by farmers today obviously can't be accounted for in the monthly Supply and Demand Estimates, which might even appear nominally bearish for spring wheat acreage, but in reality, some spring wheat fields could get replanted to sunflowers or be considered for grazing opportunities. In the nearby U.S. cash markets, the SRW Index was $4.20 or 29 cents under the July Chicago contract (basis bids stronger by a penny), the HRW Index was $3.81 or 73 cents under the July KC contract, and the Spring Wheat Index was $5.61 or 43 cents under the July Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

Follow ElaineTwitter @elainekub

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