DTN Before The Bell Grain Comments

Morning CME Globex Update:

A higher-than-expected inflation reading Tuesday morning turned some markets around, but global markets remain fairly stable, and the grain and oilseed futures charts are showing some inclination toward a corrective upward bounce. That could change once the monthly WASDE report is released at 11 a.m. Central Time.

Other Markets:

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

Corn:

The U.S.-North Korean meeting went well, and although its global political implications still aren't totally clear, the U.S. Dollar Index and global stock markets are stable Tuesday, suggesting stable grain trade for the morning. The weekly Crop Progress report shows a historically beautiful and healthy growing crop, with 77 percent of corn fields rated good or excellent. With that in mind, it would be difficult for the new crop corn futures market to work up much bullish fervor, but after dropping more than 40 cents in the past two weeks, an upward bounce now may find willing support. The ultimate direction for Tuesday's grain markets will likely depend on any surprises that could be contained in the monthly WASDE report. Meanwhile, in the old crop cash market, the DTN National Corn Index, an average of cash bids around the country, was $3.36 Monday, showing the national average basis level stronger at 31 cents under the July futures contract. At 8 a.m. USDA announced 152,000mt of corn sold to Mexico; 114,000 mt for 2017-2018 delivery and 38,000 mt for 2018-2019 delivery.

Soybeans:

Bullish adjustments could be made in this month's World Agricultural Supply and Demand Estimates (to be released at 11 a.m. Central Tuesday), with potentially smaller Argentinean soybean production and potentially smaller U.S. ending stocks, which could dampen the downward momentum seen on the soybean futures charts. After the recent string of losses in the soybean market, the country is no longer seeing $9 cash beans anymore (on average). The DTN National Soybean Index fell to $8.89 Monday. Basis bids remained steady at an average of 65 cents under the July futures contract. A small proportion of soybean planting and replanting is still ongoing in mid-June 2018, but the emerged crop looks healthy so far, with 74 percent of soybean fields rated good or excellent in the weekly Crop Progress report.

Wheat:

Rainstorms across Kansas over the next 24 hours may be welcome on dry row crop fields but disruptive to the ongoing winter wheat harvest, although on "report day," wheat futures prices could be less responsive to wheat-related weather and more responsive to other grain markets' surprises. Total open interest in Chicago wheat futures has grown dramatically over the past month. Ag commodity futures, as a sector, may be attracting investors looking for an inflation hedge, and indeed, Tuesday morning's CPI report showed slightly higher-than-expected inflation at 2.8 percent over the past 12 months, the highest level since 2012. Back in the market for real cash wheat, Southern Plains merchandisers continue to express urgency in their basis bids as they compete for relatively scarce supplies of harvested Hard Red Winter wheat (at least, for the supplies that farmers are willing to sell at this price level). On Monday, basis bids for HRW wheat strengthened another 3 cents on average -- now seen at 17 cents under the July KC contract (average cash bid at $5.18). Soft Red Winter wheat's cash bids averaged $4.88 or 26 cents under the July Chicago contract. Hard Red Spring wheat's cash index was at $5.75 and its average basis bid remained at 15 cents under the July Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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