Morning CME Globex Update:
Fresh four-year highs in American crude oil prices Thursday have brought attention back to consumer commodities, and the outside markets are generally motivating the grains to move higher Friday morning, but the day's direction and tone will likely change when a round of USDA reports are released at 11:00 a.m. Central Time.
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In the middle of the Friday trading session, which is also end-of-month and first notice day for July grain futures, the USDA will release its Quarterly Grain Stocks report (with fresh information about old crop corn consumption) and annual Planted Acreage report (with information that may update estimates for new crop corn production). Historically, these reports tend to cause extreme volatility, with new crop corn futures experiencing a daily trading range wider than 20 cents during four of the past five June 'report days.' Sometimes they spark a change in trend, but more frequently they accelerate the market's movement in whatever direction it was already going. Traders' expectations are bearish ahead of the report, with guesses that corn supplies are higher than this time last year (5.229 billion bushels) and corn acreage is larger than March's surveyed intentions (88.03 million acres). Once the information from the report has been priced in, however, corn futures traders may focus on the hot nighttime temperatures forecast for the heart of the Corn Belt, which may challenge the ultimate yields in corn fields that are already silking. The DTN National Corn Index was $3.19 Thursday, at a national average basis level of 35 cents under the September futures contract.
Still in the throes of a month-long downward trend, soybean futures prices struggled to maintain light overnight gains as Friday morning wore on. Thursday's Hogs and Pigs Report from the USDA showed the U.S. swine herd expanding at an unsurprising 3.4 percent per year, and it also implied heavier feeding of market animals and thus, heavier soybean meal demand. Domestic animal feeding may be the lone bright spot on the soy demand tables while export prospects remain uncertain during ongoing trade squabbles with China. From a supply perspective for the 2018-19 marketing year, traders bearishly expect to see the soybean planted acreage come in higher (89.79 million acres) than the surveyed intentions from March (88.98 million acres). National average soybean basis bids averaged 65 cents under the August contract Thursday, bringing the DTN National Soybean Index to $8.02 per bushel. At 8 a.m. USDA reports 130,362 mt of soybeans were sold to Mexico for delivery in 2018-2019.
Minneapolis spring wheat futures price remained higher Friday morning even in the face of an acreage report from Statistics Canada that confirmed 10.4 percent more wheat planted there in 2018 than last year. Official spring wheat acreage estimates in the United States may offset some of that North American outlook in Friday's USDA Planted Acreage report, which is expected to show 12.41 million acres of spring wheat sown during the cold, slow spring, compared to 12.63 million acres of surveyed intentions in the March report. All U.S. wheat futures are higher alongside corn, soybeans, crude oil, and stocks Friday morning. The DTN Spring Wheat Index was $5.12 Thursday or 26 cents under the September Minneapolis contract; the HRW Index was $4.54 or 18 cents under the September KC contract; and the SRW Index was $4.57 or 26 cents under the September Chicago wheat futures contract.
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