DTN Before The Bell Grain Comments

Soybeans Protect Small October Gain

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

Morning CME Globex Update:

January soybeans were up a nickel early Monday, protecting a roughly 13-cent gain with two more sessions to go in October. Corn was slightly higher while wheat prices were slightly lower, neither straying far from their sideways trading ranges.

Other Markets:

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

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Corn:

December corn was up a quarter-cent early Monday, keeping its sideways pattern intact while harvest continues to make slow progress. Last week's rain slowed progress in the eastern Midwest and the seven-day forecast looks similar this week with Indiana, Ohio, and Michigan expecting moderate amounts. The rest of the Corn Belt looks mostly dry however, favorable for more progress in the week ahead. Friday's CFTC data showed noncommercials still bearish in corn with 70,556 net shorts as of Oct. 24. Commercials increased net longs from 47,983 to 60,139, continuing to be a source of support for corn's cheaper prices. Last week's higher U.S. dollar index did not help the case for U.S. corn exports, but FOB corn prices at the U.S. Gulf are within a nickel of Brazil's lower prices. Technically, the trend in corn remains sideways with this fall's harvest providing bearish pressure. DTN's National Corn Index closed at $3.06 Friday, priced 43 cents below the December contract and is still holding above its August low. In outside markets, the December U.S. dollar index is down 0.14, pulling back from last week's new three-month high while other commodities are mixed.

Soybeans:

January soybeans were up a nickel Monday, spurred by early commercial buying in soybean meal. In one way, Monday's higher start is a bullish surprise as the forecast for central Brazil includes a broad coverage of much-needed showers for both, this week and next. On the other hand, conditions in southern Brazil have been excessively wet and local FOB soybean prices are now trading 36 cents above prices at the U.S. Gulf. Monday afternoon's Crop Progress report will likely show decent progress as producers pushed to get crops in ahead of last week's wintry weather and rain in the eastern Midwest. This week's U.S. forecast looks more favorable with mostly dry weather expected west of Indiana. Friday's CFTC data showed noncommercials lightened bullish positions in soybeans, going from 81,884 to 56,493 net longs as of Oct. 24. Technically, the trend in soybeans remains up with a lot riding on Brazil's next crop. DTN's National Soybean Index closed at $8.96 Friday, priced 79 cents below the November contract and down from its highest price in over two months.

Wheat:

December Chicago wheat was down 3/4 cent early, staying near its lowest prices of 2017 with not much happening to entice potential buyers. The southwestern U.S. Plains are expected to be mostly dry again this week and while moderate drought conditions are showing up in southern Missouri and Arkansas, traders are showing no signs of early concern. The bearish elephant in the room for wheat of course, is that USDA is estimating 960 million bushels of U.S. ending wheat stocks for 2017-18 and record high world ending wheat stocks. The only good news for producers at this point is that wheat prices have gotten cheap enough to attract commercial buying. Friday's CFTC data showed noncommercials modestly bearish in Chicago wheat with 32,903 net shorts as of Oct. 24. Commercials slightly increased net longs to 39,074. Technically, the trend in Chicago wheat remains sideways with plenty of supplies available to limit any short-term rallies. DTN's National SRW index closed at $3.90 Friday, priced 38 cents below the December contract and holding above its August low.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman