DTN Before The Bell Grain Comments

Soybeans Sag, Wheat Inches Higher

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

Morning CME Globex Update:

November soybeans were trading lower for a second day, still weighed down by this week's better chances for rain in Brazil. December Chicago was modestly higher with evidence of early commercial buying while corn was starting slightly lower.

Other Markets:

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

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Corn:

December corn was down a half-cent early Tuesday, holding a 2 cent range overnight after USDA said 51% of the corn crop was mature, down from its five-year average of 64% mature for this time of year. In Minnesota, North Dakota, and Wisconsin, mature corn crops only represent 33%, 30%, and 23% of their respective totals, well below their usual paces. This year's slow development pace remains a concern, but so far, the seven-day forecast shows no sign of significant freeze. USDA also said 11% of corn was harvested with Texas, North Carolina, and Tennessee past the half-way marks. Technically, the trend in December corn is still down, but the decline came to an abrupt halt at the end of August, thanks to commercial interest in corn's cheaper prices. DTN's National Corn Index closed at $3.09 Monday, priced 45 cents below the December contract and still up from its lowest price in eleven months. In outside markets, the December U.S. dollar index is up a second day after Germany's election, trading 0.42 higher while most commodities are lower.

Soybeans:

November soybeans were down 3 1/4 cents early, still pulled down by better chances for rain this week in central Brazil. Late Monday, USDA said 63% of soybeans were dropping leaves and 10% were harvested, close to their usual paces. Louisiana harvest was 75% complete, followed by Mississippi at 50% and Arkansas and 35%. The next five days anticipates heavy rain amounts in West Texas, but is mostly dry everywhere else, favorable for soybean harvest progress. On the demand side, export business has been active in the U.S. and Monday was only the third day of the last thirteen that USDA did not make a soybean sale announcement. FOB soybean prices at the U.S. Gulf are currently 22 cents cheaper than at Brazil's ports so the active pace should continue. Technically, the trend in November soybeans remains up, but has encountered resistance at $9.90 while traders keep an eye on early conditions in Brazil. DTN's National Soybean Index closed at $8.97 Monday, priced 74 cents below the November contract and down from its highest price in seven weeks.

Wheat:

December Chicago wheat was up 2 3/4 cents early, not backing down from Monday's new five-week high while scattered showers fall around Texas and Oklahoma. Late Monday, USDA said 24% of winter wheat was planted, a little below the five-year average of 28%. The king of winter wheat states, Kansas, was 14% planted, below its five-year average of 20% for this time of year. The five-day forecast is expecting heavy rains in West Texas to offer some benefit to surrounding areas, but should not significantly disrupt planting efforts. Monday's new five-week highs in both, Chicago and K.C. wheat prices turn the trends higher. In the larger context, wheat prices got beat down too far in August and are now searching for a more balanced trading range to accommodate both sides as we head to the final quarter on the 2017 calendar. That balance is likely to be found in a sideways range in the low to mid $4s in the months ahead. DTN's National SRW index closed at $4.11 Monday, priced 43 cents below the December contract and at its highest close in five weeks.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman