DTN Before The Bell Grain Comments

Grains Mixed; Outside Markets Higher

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

Morning CME Globex Update:

Grains are mixed with their usual quiet start on Wednesday, but other commodities are trading higher, lending slight outside support. The Federal Reserve will conclude its two-day meeting later Wednesday and traders are still waiting to hear the President's pick for the next Fed Chair.

Other Markets:

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

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Corn:

December corn was up a penny early Wednesday, showing another quiet start while prices stay close to their 2017 lows. Wednesday's weather map has patches of scattered snow in the northern U.S. Plains and a mix of rain and snow around the Ohio River Valley. The central and western Corn Belt are mostly dry, but some of the 2017 harvest is laying on the ground after being hit with windy gusts the past week. With over 14 billion bushels of new corn arriving in the U.S., December corn prices remains under pressure and are exports are also being limited by South America's success in 2017. Technically, the trend in December corn remains sideways and it may be difficult to get much of a rally until this fall's harvest is put away. DTN's National Corn Index closed at $3.03 Tuesday, priced 42 cents below the December contract and is still holding above its August low. In outside markets, commodities are mostly higher with both, metals and energies showing signs of an improving world economy. The December U.S. dollar index is up 0.25 after ADP reported 235,000 new private sector jobs in October, more than expected.

Soybeans:

January soybeans were up 3/4 cent Wednesday, helped by light commercial buying in soybean oil to start the day. Trading in soybeans turned quiet in the second half of October, but prices have been able to hold roughly steady with help from active demand and from early concerns about Brazil's next crop. This week's forecast expects beneficial rains in central Brazil, but the crop still has a long way to go and Brazil's higher FOB soybean prices are giving the U.S. an export advantage. Meanwhile, here in the U.S., there are still more soybeans to harvest and rain in the eastern Midwest may be a challenge this week. Technically, the trend remains up in January soybeans, but appears to be stalling with much still to learn about Brazil's next crop. DTN's National Soybean Index closed at $8.95 Tuesday, priced 89 cents below the January contract and down from its highest price in over two months. 47 delivery intentions were reported for November soybeans early Wednesday.

Wheat:

December Chicago wheat was down 1 1/2 cents early Wednesday, extending Tuesday's new low while traders continue to avoid the long side of wheat futures. As mentioned in Tuesday's closing market video, cash winter wheat prices are holding roughly steady while the premium in futures markets is evaporating away and gives the impression that wheat prices are trending perpetually lower. This process of chewing through the carry keeps noncommercial traders out of the long side of wheat and sometimes traps them into taking on too many shorts. But there is no sign of that yet and watching the carry in futures contracts disappear is likely to continue while both, domestic and world wheat supplies remain plentiful. Tuesday's new low in December Chicago wheat turned the trend lower, but bearish potential is limited at these cheap prices. DTN's National SRW index closed at $3.84 Tuesday, priced 35 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