DTN Before The Bell Grain Comments

Morning CME Globex Update:

Once again, wheat prices were showing a modest early gain and we have to wonder if prices are finally finding the support that we have been waiting to see. Corn and soybeans were close to Thursday's closes, possibly set for a quiet Friday of trading with rain in the forecast for early next week.

Other Markets:

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

Corn:

December corn was down 1/4 cent early, showing a narrow, overnight range while light, scattered showers dot the western Plains. The next three days are expected to be mostly dry across the Corn Belt with Monday and Tuesday offering the best chances for rain in the week ahead. Iowa is supposed to be included in the rain path, but it is not clear yet how much rain Iowa's drier regions may get, if any. This summer's crop tours will be interesting to follow, but a good national estimate is not likely until October's WASDE report and by then, corn prices are typically trading near their seasonal lows. If this year's crop does fall short of expectations, it is more likely to show up in prices in the form of a post-harvest rally and in early 2018 when the corn is stored away. In the meantime, it is difficult to find buyers ahead of this year's harvest and that is keeping December corn near its lows in 2017. DTN's National Corn Index closed at $3.12 Thursday, priced 38 cents below the September contract and at a new 2017 low. In outside markets, the September U.S. dollar index is down 0.12, still near its lowest prices in two years while other commodities are starting the day mostly higher.

Soybeans:

November soybeans were down 3/4 cent early, also showing a quiet overnight trading range with rain expected to reach eastern Iowa early next week, but less certain amounts for the western side of the state where conditions are dry. The western Midwest has seen beneficial rain the past seven days while the eastern Midwest was mostly dry. Iowa remains a wildcard with extreme and severe drought conditions marked in Thursday's U.S. Drought Monitor map. In spite of this year's challenges, it is still possible that we could see another record soybean harvest in 2017 and that is keeping November soybean prices at the lower end of this year's trading range. The difference between soybeans and other grains is that world soybean demand remains a bullish source of support and another reduction in USDA's estimate of old-crop ending stocks looks likely. With plenty of uncertainty over the size and condition of this year's soybean crop, November soybeans remain under bearish pressure, but are holding above their June low at $9.07. DTN's National Soybean Index closed at $8.71 Thursday, priced 62 cents below the November contract and holding above its lows in June.

Wheat:

September Chicago wheat was up 2 3/4 cents, getting an early response of bargain-hunting after falling to another new contract low on Thursday. Spot Chicago prices are still well above their 2017 low at $3.98 1/2, but after falling for over six weeks, the trend is in motion and it has been difficult to entice buyers back to the market. Commercials are wheat's best hope for supporting prices at these lower levels, but one concern is that futures spreads for both, Chicago and K.C. are showing prices in distant futures months trading above carry which is a bearish sign of near-term demand. The result is that we have some unexpectedly cheap wheat prices in a year when U.S. wheat production is anticipated to be down 25% or more and it is not clear yet where support may show up. Meanwhile, the seven-day forecast remains mostly dry in the northwestern Plains, supportive for spring wheat harvest progress where any were fortunate enough to escape this year's drought. Moderate rains are expected over Kansas and eastern Oklahoma which will be helpful for fall planting conditions. So far, winter wheat contracts remain in a downtrend. Much like Charlie Brown trusting Lucy to hold the football, I will say once again that support should be near at these lower levels. DTN's National SRW index closed at $3.86 Thursday, priced 28 cents below the September contract and at its lowest price in three months.

Todd Hultman can be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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