DTN Before The Bell Grain Comments

Grains Attempt a Recovery

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

Morning CME Globex Update:

The soy complex has led the tentative recovery Wednesday morning, with soybean futures experiencing some double-digit gains overnight, soybean meal up $4, and soybean oil up 0.20 cents.

Other Markets:

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

Corn:

The long-awaited bounce in corn prices may finally be happening, and new crop futures prices have stayed above $3.70 so far this week. However, none of the global trade antagonism has yet been resolved, so it is likely that widespread markets, including the stock markets and consumer commodity markets, will continue to feel bearish pressure from nervous investors. And the grain markets have an additional source of nervousness this week: on Friday, USDA will release its Quarterly Grain Stocks report and Planted Acreage report, which traders are expecting will show more acres planted to corn than previously estimated. In the old crop cash corn market, the DTN National Corn Index, an average of local bids around the country, was $3.25 Tuesday, showing the national average basis level steady at 28 cents under the July futures contract. This Friday will also be first notice day for July grain futures contracts.

Soybeans:

Soybean futures are leading the recovery Wednesday morning, with double-digit gains off and on through the early part of the trading session. Total open interest in soybean futures has fallen more than 10 percent since the middle of the month, but once that volume of risk-averse portfolio liquidation is complete, soybean prices will more easily respond to the buying interest of the commercial side of the market. Rail shippers have been able to buy cash soybeans with a $7 at the front of their price tag in some parts of the western Corn Belt. The nationwide average old crop basis bid collected by DTN Tuesday strengthened to 60 cents under the July contract ($8.07 average cash price). The nationwide average new crop soybean basis bid continues to linger at 71 cents under the November contract ($8.16 average cash price).

Wheat:

Thunderstorms and showers in the forecast may be beneficial to the developing spring wheat in the U.S. and Canada, but spring wheat futures are nevertheless joining the Chicago and KC wheat contracts (and the row crops) in their higher movement Wednesday morning. Competitive demand for relatively scarce Hard Red Winter wheat supplies this year has cranked the average basis bid to its strongest level yet -- only 2 cents under the July futures contract Tuesday. The bids collected in that average include 41 cents over the July at Tulsa and a bevvy of buyers posting 20 over the July around Wichita, but of course there are more typical harvest bids (30 to 60 cents under futures) in the western part of the region where the wheat requires more trucking. Meanwhile, DTN's SRW Index was $4.49 Tuesday or 21 cents under the July Chicago contract. The Spring Wheat Index was $5.20 Tuesday, or 13 cents under the July Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub