DTN Before The Bell Grain Comments

Morning CME Globex Update:

The weekly Crop Progress report showed generally favorable development of corn and soybeans which, alongside a favorable weather forecast, is likely to keep prices headed downward. Gold, crude oil, and most other commodities are similarly lower Tuesday morning with the stock markets and the U.S. Dollar Index recover after recent geopolitical scares.

Other Markets:

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

Corn:

As long as it looks like the upcoming U.S. corn harvest will be abundantly large, at 14 billion bushels or so, the natural direction for corn prices to travel will be downward, and that is still the case on Tuesday morning. The new crop December futures contract is sliding lower by 4 cents per bushel and could eventually fall below this week's fresh yearly low at $3.70, especially if outside markets' economics continue to pressure commodities. The U.S. Dollar Index is higher Tuesday morning and most commodities are lower in response. The DTN National Corn Index, an average of nearby cash bids around the country, came to $3.23 Monday, with the national average basis level steady at 39 cents under the September futures contract.

Soybeans:

Soybean futures are a few cents lower at the start of Tuesday's trade, but soybean meal and Malaysian palm oil prices remain well off last week's lows while global politics appear to have calmed down for the time being. The stock markets, at least, continue to recover on Tuesday as traders forget the threat of imminent nuclear war, or at least acknowledge it's no more likely today than any other day. The Nikkei stock index in Japan rose 1.1 percent Tuesday, and U.S. stocks may post a similar recovery as the day continues. Meanwhile, drought lingers across much of the Western Corn Belt as soybeans reach a critical reproduction stage (79 percent setting pods in this week's Crop Progress report), but forecast rain over the next several days could recharge at least a shallow band of topsoil, and will likely keep soybean traders in a bearish mood. The DTN National Soybean Index was $8.73 Monday, with average soybean basis remaining steady at 65 cents under the November futures contract. At 8 a.m. USDA reported 132,000 mt of soybeans sold to China and Unknown destinations, both for 2017-2018 delivery.

Wheat:

The spread between KC September and December futures, showing how much wheat owners can earn by storing the newly-harvested product for the next several months, is as wide (bearish) this week as it has ever been -- growing to 28 cents at one point and still lingering near there Tuesday morning. For any wheat elevators with outdoor storage plans, a continued series of rain showers across the Southern Plains has been keeping them on their toes. The overall direction of wheat futures on Tuesday appears to be downward alongside corn and soybeans. In the nearby U.S. cash markets, the SRW Index was $4.11 or 30 cents under the September Chicago contract (basis bids steady with the previous day); the HRW Index was $3.69 or 68 cents under the September KC contract, and the Spring Wheat Index was $6.27 or 43 cents under the September Minneapolis contract. Note that while spring wheat futures have fallen dramatically from their early July $8.16 high, on the physical market spring wheat still maintains a historically abnormal premium, more than 50 percent, over benchmark feed wheat prices.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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