DTN Before The Bell Grain Comments

Grain Prices' Downward Trends Persist

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

Morning CME Globex Update:

Nothing has sparked a turnaround in corn and soybean prices yet as of Monday morning. To the contrary, additional trade tensions between the U.S. and its neighbors are likely to keep investors' money fleeing out of any 'risky' asset classes. Wheat prices, on the other hand, are up Monday morning while traders weigh their concerns for the Russian crop and for U.S. milling wheat supplies.

Other Markets:

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

Corn:

Corn futures have started the week by following through last week's losses with more of the same, although the new crop December contract trading at $3.70 remains 10 cents above the contract low established last month. The end-of-June USDA reports showed more old crop corn on hand than last year at this time and more new crop corn planted than the market previously expected (but fewer corn acres than soybean acres, for the first time since the 80's). Looking forward, Monday afternoon's Crop Progress report is widely expected to show a happy, verdant crop, much more than knee-high before the Fourth of July, with bearishly large yield potential. Traders will also note what proportion of the corn crop is already silking and may have been affected by hot weather in the Midwest over the weekend, although the weather forecast no longer contains much of that threat in the near future. The DTN National Corn Index, an average of cash bids around the country, was $3.24 Friday, showing national average basis steady at 35 cents under the September futures contract.

Soybeans:

Soybean prices are lightly lower, pressured by a stronger U.S. dollar and negative influences from outside markets. Global stock markets have started the week with continued losses, suggesting that investors are still alarmed by the prospects of global trade being disrupted between the United States and virtually all of its most important customers and suppliers. At the end of June, investors were pulling money out of 'risky' asset classes at a faster pace than any time since the latest recession, and total open interest has been disappearing out of soybeans, too. Friday's Commitments of Traders report showed the Managed Money segment of traders net-short in soybean futures, with 1.5 times as many short positions as long positions in futures and options, after being net long only two weeks previously. In the cash soybean market, national average soybean basis bids averaged 64 cents under the August contract Friday, bringing the DTN National Soybean Index to a round number: $8.00 per bushel.

Wheat:

Futures for the two milling wheat varieties, Hard Red Winter wheat and Spring wheat, are posting notable gains compared to the rest of grain sector, with the KC futures up by double digits at several moments Friday morning. Domestic business may be driving those gains, encouraged by the opportunity to lock in KC futures prices below the $5 mark. Additionally, hot, dry weather forecasts in the Black Sea Region, and reported poor harvest results from some winter wheat fields in southern Russia, may be keeping some bullish concern focused on wheat. DTN's SRW Index was $4.77 or 24 cents under the September Chicago wheat futures contract; the HRW Index was $4.72 or 17 cents under the September KC contract (very strong for this time of year); and the DTN Spring Wheat Index was $5.13 Friday or 23 cents under the September Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub