DTN Before The Bell Grain Comments

Wheat Expresses Independence

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

Morning CME Globex Update:

Row crop futures remain in deep downward trends and could easily establish fresh lows Tuesday if pre-holiday liquidation occurs during the short trading session. The double-digit gains in all three wheat contracts, therefore, demonstrate a unique willingness to stabilize the charts after recent losses.

Other Markets:

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

Corn:

Light gains Tuesday morning do little to change the overall direction of the corn market, and the new crop December chart could easily re-test the fresh contract low it hit at the start of the week: $3.58 1/2. The weekly Crop Progress report showed 17 percent of the U.S. corn crop already silking, when the five-year average would be to see only 8 percent of fields silking at this time of year. Progress is especially accelerated in Illinois, Missouri, and Kansas, where the 10-day forecast shows dry and hot expectations, but nighttime lows generally below 75 degrees. Grain futures trade will close at 12:05 Tuesday, remain closed all day Wednesday to recognize the Independence Day holiday, and not re-open until 8:30 Thursday morning. The DTN National Corn Index, an average of cash bids around the country, was $3.13 Monday, showing national average basis stronger at 34 cents under the September futures contract. There were 369 issues and stops in the daily deliveries report for the expiring July corn futures contract.

Soybeans:

Trading below $8.50 per bushel, the continuous soybean chart (which currently tracks the expiring July contract) is in danger of moving lower than the prices traded during the June 19th trade war meltdown, and ultimately, moving lower than it's been since December 2008. Investors continue to express serious concern about the loss of global trading patterns that have mutually benefitted the United States and the global economy in recent decades, and time is running out for decision makers to change course. Global stock prices and soybean prices are in a real losing streak, but crude oil prices are rising, which, along with a flattening yield curve, is a classic harbinger of global recession. In the cash soybean market, national average soybean basis bids averaged 62 cents under the August contract Monday, bringing the DTN National Soybean Index to $7.91 per bushel. There were 692 issues and stops in the daily deliveries report for the expiring July soybean futures contract, and 1,275 issues and stops for the expiring July soybean oil contract.

Wheat:

Perhaps the greatest demonstration of this season's accelerated biological progress comes from the U.S. spring wheat crop, where a cold spring delayed much of the planting, but this week's Crop Progress report showed 58 percent of the fields already heading, which is 10 percentage points ahead of the average progress by this time. Spring wheat's condition ratings are historically promising, just like the row crops'. The average cash bid for HRW wheat suddenly weakened by four cents Monday to 21 cents under the September KC contract, now that the U.S. winter wheat harvest has officially passed its halfway point, a little faster than usual in Kansas, Oklahoma, and Midwestern SRW-growing regions. There were 152 issues and stops in the daily deliveries report for the expiring July KC wheat contract, and 62 for the expiring July MGEX spring wheat contract, but 0 for the Chicago contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub