DTN Before The Bell Grain Comments

North Korea Returns to List of Bearish Concerns

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
Connect with Todd:
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

At 8 a.m. CDT, USDA announced 7.3 million bushels (198,000 metric tons) of U.S. soybeans were sold to China for 2017-18. 8.9 mb (226,000 mt) of U.S. corn were sold to Mexico for 2017-18. Big crops, Hurricane Harvey, and now, another provocative missile launch from North Korea adds to this week's bearish concerns for grains. Corn, soybeans, and all three wheats are starting lower Tuesday while other commodities are mostly higher.

Other Markets:

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

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Corn:

At 8 a.m. CDT, USDA announced 8.9 mb (226,000 mt) of U.S. corn were sold to Mexico for 2017-18. Before the announcement, December corn was down 2 1/2 cents, continuing its slide to new lows after North Korea just fired a missile over Japan, one of the top U.S. trading partners. Meanwhile, rain continues to fall over southeastern Texas and Louisiana and is expected to move into the Mississippi Delta and southeastern U.S. the next seven days, as far north as the Ohio River. The rest of the Midwest will be mostly dry with mild temperatures. Late Monday, USDA said 44% of corn was dented and 6% was mature, still below five-year averages of 51% and 10%, respectively. Corn's good-to-excellent rating was unchanged, but showed improvement in South Dakota while North Dakota and Indiana rated a little worse. So far, a corn crop around 13.8 billion bushels to 13.9 bb seems likely this fall. That is down from a year ago, but enough to keep commercials unconcerned about obtaining supplies right now and the reason prices continue to struggle to find support ahead of harvest. DTN's National Corn Index closed at $3.00 Monday, priced 36 cents below the September contract and near its 2017 low. In outside markets, stock market futures are lower and the September U.S. dollar index is down 0.39, trading at its lowest level in over two years after North Korea provoked the U.S. with another missile fired over northern Japan.

Soybeans:

At 8 a.m. CDT, USDA announced 7.3 mb (198,000 mt) of U.S. soybeans were sold to China for 2017-18. 8.9 mb (226,000 mt) of U.S. corn were sold to Mexico for 2017-18. Earlier, November soybeans were down 6 1/4 cents as tensions with North Korea increase and add further strain to U.S. relations with China. At the same time, the soybean crop continues to do fairly well considering this year's adverse conditions. Late Monday, USDA said 93% of soybeans had set pods and 6% were dropping leaves, in line with their usual pace. The good-to-excellent rating was raised 1 point to 61%, resulting in a 4-point increase in DTN's Soybean Condition Index, to 147. Last week's rain brought slight improvements to soybean crops in the Dakotas, Nebraska and Iowa, while crop conditions in Illinois and Indiana got a little worse. Most of the Midwest will be dry the next seven days while temperatures stay mild. Another record soybean harvest is still possible this fall and that continues to keep November soybean prices under bearish pressure as is typical for this time of year. DTN's National Soybean Index closed at $8.80 Monday, priced 61 cents below the November contract and holding above its lows in June.

Wheat:

December Chicago wheat was down 4 1/2 cents early Tuesday, continuing its slide to new contract lows as buyers stay away. As mentioned before, it is odd to see prices behaving this bearish in a year when U.S. and Canadian wheat production are down, but one look at the futures spreads for Chicago and Kansas City wheat shows markets paying more than the cost of carry for producers to sell wheat at distant months -- a strong bearish message from commercials. This week's wheat prices also have added bearish pressure from Hurricane Harvey as it will be a while before wheat ships out of Texas again. Late Monday, USDA reported 76% of spring wheat harvested, ahead of schedule with the seven-day forecast, giving a green light for further progress. Winter wheat prices are cheap enough to be finding support again, but potential buyers are in no hurry with exports likely to slow for a time while world supplies remain high. DTN's National SRW index closed at $3.74 Monday, priced 26 cents below the September contract and near its lowest prices in over three months.

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

FollowTodd on Twitter @ToddHultman1

(BAS)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Todd Hultman