Morning CME Globex Update:
Grain and oilseed futures markets have started the week by expressing the same bearish macroeconomic concern shared by the global stock markets, which remain alarmed by the prospects of a trade war between the world's two largest economies. Soybean losses have been trimmed through the morning while the U.S. Dollar Index has been moving lower.
|U.S. Dollar Index:||Lower|
Abundant recent rainfall across the U.S. Corn Belt suggests that Monday afternoon's Crop Progress report will show a thriving corn crop with large yield potential, a consideration which may sustain the bearish pressure on new crop futures prices. So far Monday, the December futures contract has stayed at least 12 cents above the $3.60 low established during last Tuesday's volatile sell-off. Speculative traders are expected to be active this week ahead of the quarterly Grain Stocks report and the annual Planted Acreage report, both of which will be released on Friday June 29. Meanwhile, in the cash corn market, the DTN National Corn Index, an average of cash bids around the country, was $3.29 Friday, showing the national average basis level steady at 28 cents under the July futures contract.
Soybean futures were lower by double digits Monday morning, although the November contract has so far remained above the $9.00 level where support has been apparent in recent sessions. Investors must prepare their portfolios for the expectation of widespread disruptions in global trade, and correspondingly, the first clue of overall opinion about global economic risk comes from the Monday direction of the Asian stock markets. This week again, that mood seems to be bearish. Last week's Commitment of Traders report from the CFTC suggested that 'managed money' participants have been short selling soybean futures, and commercial processors have taken the opportunity to lock in prices for the equivalent of 82 million bushels of soybeans at a level that's 15 percent off the recent high. The DTN National Soybean Index was $8.33 Friday, with basis bids steady at an average of 61 cents under the July futures contract. At 8 a.m. USDA reported 186,000 mt of soybeans sold to unknown destinations for delivery in 2017-2018.
A hot weather forecast and continued dryness in southern Russia may keep global wheat traders' attention at the start of this week, but any concern from that factor will be more than outweighed by the market's overall confidence in huge global supplies. Even in North America, where HRW yields from the Southern Plains harvest have continued to come in below average, the milling wheat market will feel more bearish confidence this week as the forecast for showers on the Canadian Prairies plays out. Cash prices for U.S. feed wheat averaged $4.70 per bushel Friday, according to DTN's SRW Index, equivalent to 21 cents under the July Chicago contract. The HRW Index was $4.85, still showing astonishing harvest-time basis bids that averaged only 4 cents under the July KC contract. The Spring Wheat Index was $5.35 Friday, or 14 cents under the July Minneapolis contract.
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