DTN Before The Bell Grain Comments

Soybeans See Early Bounce Higher

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

Morning CME Globex Update:

At 8 a.m. CDT, USDA announced China bought 4.8 million bushels (131,000 mt) of U.S. soybeans for 2017-18. Earlier, November soybeans were up 5 1/2 cent, bouncing back quickly from Monday's loss with ongoing concerns of dry conditions in central Brazil. Corn and wheat stayed close to Monday's closes with weekly reports of export inspections and crop progress on Tuesday's docket.

Other Markets:

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

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Corn:

December corn was up a half-cent early Tuesday, staying quietly sideways ahead of Tuesday afternoon's update of harvest progress from USDA. Early morning temperatures fell below freezing in the Dakotas and northern Minnesota, but gradual warming is expected in the days ahead with moderate to heavy rain amounts from Iowa to Michigan. That will add further delay to this year's already slow harvest pace, but so far, traders are showing no concern with 2.25 billion bushels of U.S. ending corn stocks expected in Thursday's WASDE report. Technically, the trend in December corn remains down, but commercials are lightly net long and prices have not made a new low since hitting $3.44 1/4 on Aug. 31. DTN's National Corn Index closed at $3.05 Monday, priced 45 cents below the December contract and has held roughly even for over a month. In outside markets, the December U.S. dollar index is down 0.30 and December gold is up $6.90 as traders again show concerns about tensions with North Korea.

Soybeans:

At 8 a.m. CDT, USDA announced China bought 4.8 million bushels (131,000 mt) of U.S. soybeans for 2017-18. Before the announcement, November soybeans were up 5 1/2 cents, still maintaining a sideways trading range since September even though another record soybean harvest is expected this fall. According to Dow Jones, analysts are expecting USDA to lift its soybean production estimate slightly, from 4.43 to 4.44 billion bushels on Thursday. Rain is falling around the central Midwest early Tuesday and will add to harvest delays the next five days. Temperatures are expected to turn warmer again after Tuesday's lows dipped below freezing in the Dakotas and northern Minnesota. Further south, FOB soybean prices are 19 cents more expensive at Brazil's ports than at the U.S. Gulf with dry conditions in central Brazil still a concern for the next new crop. Technically, the trend in November soybeans remains up with resistance at the September high of $9.87. DTN's National Soybean Index closed at $8.88 Monday, priced 78 cents below the November contract and holding a sideways range for over a month.

Wheat:

December Chicago wheat was down 3/4 cent early Tuesday, staying near its lowest spot prices in 11 years with no bullish arguments to attract buyers and a seven-day forecast that is mostly dry and favorable for winter wheat planting progress. Dow Jones' survey of analysts expects USDA's estimate of U.S. ending wheat stocks to be raised, from 933 to 946 million bushels. More tweaks will likely be seen to world estimates, but a big surprise is not likely this late in the season. Cash SRW wheat prices in DTN's national index are 43 cents higher than they were a year ago, but are still cheap enough to look attractive to commercials. Technically, the trend remains down in both, Chicago and K.C. wheat. In the case of Chicago wheat, commercials are helping provide support in the low $4s. DTN's National SRW index closed at $3.96 Monday, priced 40 cents below the December contract and down from its highest price in six weeks.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman