DTN Before The Bell Grain Comments

At These Prices, Grains Find Some Buyers

Elaine Kub
By  Elaine Kub , Contributing Analyst
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

Grain and oilseed futures prices may still slide farther as the global investment community continues to assess its risky portfolio positions ahead of a trade war between the world's two largest economies. But during moments of relatively quiet trading volume Tuesday morning, commercial grain users who buy futures to lock in prices are demonstrating their demand for these crops, no matter how large the yields may be.

Other Markets:

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

Corn:

Weekly crop condition ratings of corn and sorghum still show a thriving feed grains crop with high yield potential, but some concerns may linger for the flooded edges of fields where recent excessive moisture has fallen in the western Corn Belt. Mind you, those concerns aren't widespread enough to seriously spark a bullish reaction in the futures market at this time, but the new crop December chart has stayed above support at $3.69 since last Wednesday. The first few corn fields have started silking in the southern heart of the Corn Belt (Illinois, Indiana, Missouri), and although the long-term weather forecasts are always uncertain, producers and traders will start seriously watching for threats of damaging heat during pollination, which can't be ruled out yet even in the 6-10 day outlook. Meanwhile, in the old crop cash corn market, the DTN National Corn Index, an average of local bids around the country, was $3.23 Monday, showing the national average basis level steady at 28 cents under the July futures contract.

Soybeans:

After 20-cent losses at the start of the week, the new crop November soybean contract fell below $9 per bushel, and a mild bounce Tuesday morning hasn't changed the aggressively bearish trend of this market. In most of the western Corn Belt, the local cash bids for old crop soybeans now have a $7 as their first digit. The nationwide average new crop basis bid collected by DTN Monday was 71 cents under the November contract ($8.24). Commercial soybean processors have demonstrated their willingness to buy soybean futures and lock in these "bargain" prices, but there is simply still too much investor liquidation occurring amid the global trade war concerns, and the tepid buying activity can't effectively turn this market around.

Wheat:

Forty-one percent of U.S. winter wheat has been harvested as of Sunday night's observations, including 66 percent of the Soft Red Winter wheat crop in Illinois, showing there are still standing supplies that may be damaged by excess moisture during this harvest timeframe. Rain is falling in Illinois Tuesday, but has cleared off from Kansas, where the Hard Red Winter wheat harvest is just over half complete. Spring wheat condition ratings slipped slightly in the weekly Crop Progress report, but that should not be interpreted bullishly in the global context of a favorable forecast for showers on the Canadian prairies and over in Ukraine. In the cash wheat market, DTN's SRW Index was $4.55 Monday or 22 cents under the July Chicago contract. The HRW Index was $4.66, still showing astonishingly strong harvest-time basis bids that averaged only 3 cents under the July KC contract. The Spring Wheat Index was $5.26 Monday, or 14 cents under the July Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub