Morning CME Globex Update:
Grain and oilseed futures prices remain locked in a period of downward momentum. Futures trade was active Thursday morning while traders' geopolitical outlooks remain in flux. A long-term higher trend in the U.S. Dollar Index is traditionally bearish to grains and oilseeds.
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The weekly update to the U.S. Drought Monitor showed dry areas continued to grow, even in the Midwestern Corn Belt, which may remind traders in the corn market of the risks faced by the crop during any growing season. Similarly, a weekly improvement in export sales progress could serve as a positive nudge to the corn market Thursday morning. Nearly a quarter of the export activity was directed toward NAFTA partner Mexico. In the domestic old crop cash market, the DTN National Corn Index, an average of cash bids around the country, was $3.45 Wednesday, showing the national average basis level steady at 31 cents under the July futures contract.
The soybean market has sloughed off more than $1 per bushel during the past twelve trading sessions, amid broadly favorable U.S. production prospects and considerable uncertainty about where all those soybeans will go in a world of shifting trade prospects. The weekly export sales report showed 519,600 metric tons of soybean sales, a welcome improvement in pace compare to recent weeks, but didn't receive any immediately bullish reaction in the futures trade. Nothing goes down forever, and losses on the soybean chart appeared to slow down overnight. The DTN National Soybean Index was $8.73 Wednesday, its lowest level since August 2017 and showing average basis bids stronger at an average of 63 cents under the July futures contract.
Moscow will see sunny weather Thursday for the start of the 2018 World Cup, but there are showers in the forecast 800 miles away on the wheat fields of western Ukraine, which may calm this week's previous market concerns about wheat production from that region, and the global benchmark Chicago wheat futures contract continued to move lower Thursday morning. U.S. cash bids for Soft Red Winter wheat averaged $4.93 Wednesday, showing stronger average basis of 24 cents under the July Chicago contract. The real wheat basis excitement this week, however, is coming from the HRW cash market, where bids continued to crank higher Wednesday and are now averaging 12 cents under the July KC contract. Rain may fall Thursday on the droughty Canadian prairies, but the forecast turns hot and dry after that, adding stress to North America's 2018 spring wheat production. Spring wheat continues to be the most highly-sought-after variety from the U.S. export market. The DTN Spring Wheat Index was $5.70 Wednesday or 15 cents under the July Minneapolis contract.
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