DTN Before The Bell Grain Comments

Grains Mixed Early, U.S. Dollar Rebounds

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

Morning CME Globex Update:

At 8 a.m. CDT, USDA announced 4.8 million bushels (131,000 mt) of soybeans were sold to China for 2017-18. Grains were mixed earlier with dry weather across the Midwest and little grain news on Wednesday's docket after ethanol's weekly inventory report. The U.S. dollar is trading higher early after the Commerce Department reported higher-than-expected GDP growth for the second quarter.

Other Markets:

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

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Corn:

December corn was down a quarter-cent early Wednesday, a quiet pause near the end of a month that has seen prices fall over 35 cents. Weather in the Midwest has turned dry and is expected to stay that way the next seven days while temperatures remain mild. Heavy rains continue to hover over eastern Texas and are slowly moving eastward with the southeastern U.S. expected to see moderate to heavy amounts in the week ahead. For the most part, crops are biding time with the lowest corn crop ratings USDA has put out since 2013. If the ratings are somewhat accurate, a crop near 13.8 or 13.9 billion bushels seems a reasonable guess, but there is always a chance for surprise. Unfortunately for producers, with FOB corn prices currently favoring export business in Brazil, corn prices have not been able to find support in August while noncommercials came under increased pressure to liquidate. December corn remains under bearish pressure and with DTN's national index now below $3.00, the seasonal low which normally comes around early October, could show up any time. DTN's National Corn Index closed at $2.98 Tuesday, priced 36 cents below the September contract and near its lowest price in nine months. In outside markets, the September U.S. dollar index is up 0.45, rebounding from Tuesday's test of its two-year low after the Commerce Department said real GDP was up 2.2% in the second quarter from a year ago, more than expected.

Soybeans:

At 8 a.m. CDT, USDA announced 4.8 million bushels (131,000 mt) of soybeans were sold to China for 2017-18. November soybeans were unchanged earlier after a quiet overnight session with a dry weather map across the Midwest on Wednesday morning. Crops in Illinois and Indiana could use more rain, but not much is expected to cross north of the Ohio River the next seven days. Even so, another record fall harvest is still possible and that is keeping prices under bearish pressure. Soybeans have two more weekly export sales reports left in 2016-17 and recent cancellations have brought old-crop totals down to roughly 50 million bushels above USDA's export estimate. It will be interesting to see how the year finishes out and there is still a chance USDA's export estimate will have one more chance to bring ending stocks down in the old-crop season. With crops maturing in the field, November soybeans remain under bearish pressure, but continue to hold above the June low at $9.07. DTN's National Soybean Index closed at $8.77 Tuesday, priced 60 cents below the November contract and holding above its lows in June.

Wheat:

December Chicago wheat was up 2 3/4 cents with another show of commercial buying early in the day that may or may not hold up at the close. In spite of this year's lower wheat production in the U.S. and Canada, wheat prices continue to struggle to find support, but should have a better case with cash SRW prices now at their lowest level since April. One of the main bearish problems that we cannot ignore is the lack of commercial interest for front-month contracts of both, Chicago and K.C. wheat, which speaks poorly for the demand side of wheat. Hurricane Harvey has also not helped this week with new concerns that wheat exports will be restricted for a while. The seven-day forecast looks dry for the southwestern Plains and the northwestern U.S. where the final fourth of spring wheat harvest is taking place. Winter wheat contracts remain under bearish pressure with prices cheap enough to be close to finding support. DTN's National SRW index closed at $3.76 Tuesday, priced 27 cents below the September contract and near its lowest prices in four months.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman