DTN Before The Bell Grain Comments

Morning CME Globex Update:

The crude oil chart appears to have arrested its downward slide for the time being, while improving stock market values suggest that the global economy has moved away from fear and back toward growth. This generally optimistic outlook helps grain market bulls in a small way Wednesday, but futures gains are so far light, with the exception of Minneapolis spring wheat futures, which are higher by double digits.

Other Markets:

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

Corn:

Grain futures prices have started the morning in a rare direction -- upward -- with December corn trading at $3.68 1/2 per bushel and March corn up 1/4 cent. A pause in the fund selling overnight allowed the markets to take a break from their unrelenting bearish trends. Meanwhile, the recuperating global stock markets and some strength in crude oil and ethanol futures overnight also helped the small corn recovery. Extremely hot weather in eastern Ukraine is one source of potential bullishness about the northern hemisphere's feed grain production in 2017, but it's not enough of a concern to outweigh the overall bearish seasonal trend toward harvest. The DTN National Corn Index, an average of nearby cash bids around the country, came to $3.16 Tuesday, its lowest value of 2017 so far, with the national average basis level steady at 39 cents under the September futures contract.

Soybeans:

A favorable July NOPA Crush number (144.7 million bushels) released Tuesday is a reminder of strong demand for soy products, but it's not enough to spark sustained buying interest in the futures market. Prices are 2 to 3 cents higher during the early part of Wednesday's trade, which does little to counteract the $1.21 of losses that soybeans have experienced since the July 11 market high. Some areas of Iowa may miss the rains this week, bu overall, the outlook for filling soybean pods in the central Corn Belt looks quite favorable in the weather forecast. This bearish factor leaves the market in danger of resuming its bearish trend as the Wednesday session continues through the day. The DTN National Soybean Index was $8.60 Tuesday, with average soybean basis strengthening in opposition to the futures losses, now at 64 cents under the November futures contract.

Wheat:

Spring wheat futures may be well off their July $8.16 high, but there are still at a historically strong premium (over 50 percent) over benchmark feed wheat futures, and the market appears intent on maintaining this price relationship Wednesday morning. Minneapolis futures are far and away the leaders of the gains throughout the grain complex -- moving higher by double digits in a correction of Tuesday's double-digit losses. One positive day doesn't change the overwhelmingly bearish trend of the overall wheat market, however. The weather forecast calls for mostly dry weather in the northern plains, which will help the spring wheat harvest continue apace. In the nearby U.S. cash markets, the average basis bids for all wheat varieties strengthened by a penny Tuesday. The SRW Index was $4.00 or 29 cents under the September Chicago contract; the HRW Index was $3.59 or 67 cents under the September KC contract; and the Spring Wheat Index was $6.16 or 42 cents under the September Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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