DTN Before The Bell Grain Comments

Grains Keep Their Heads Above Water

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

Morning CME Globex Update:

Most outside markets are showing economic optimism from investors, and even the light losses in grain and oilseed futures Monday morning shouldn't be seen as disastrously bearish. After Friday's sudden gains, even a 10-cent loss in soybean futures nevertheless allows the November contract, for instance, to stay 30 cents above the Friday low of $8.53 1/4.

Other Markets:

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

Corn:

The corn market has started the week with light losses to trim about half of Friday's exuberant gains, but investor optimism evident in the outside markets may eventually work its way into the grain sector as the day wears on. The dollar is lower, global stock markets are moving higher, and crude oil is showing a steady outlook for consumer commodities. Like lost boys emerging from a cave, the grain and oilseed markets will likely have to dive underwater at moments before they can come out to the light. If last week's contract lows hold up as support, the new crop December corn contract will need to stay above $3.58 1/2. On Monday morning, it's trading about 10 cents above that level. The DTN National Corn Index, an average of cash bids around the country, was $3.27 Friday, showing national average basis steady at 33 cents under the September futures contract. There were 259 issues and stops in the daily deliveries report for the expiring July corn futures contract.

Soybeans:

After driving soybean prices more than $2 lower through June and the first week of July, a full 20 percent loss, traders no longer seem willing to pile on bearish short futures positions. Profit-taking from those previous positions, as well as fresh buying interest at these bargain prices, helped to pull the continuous soybean chart well off Thursday’s $8.34 low in fast trade at the end of last week, once the "worst-case" tariff scenario stopped being a threat and instead became official policy between the world's two largest economies. Futures markets focus on the future, and of course we don't know if the current tariff regime is the final worst-case for U.S. soybeans, or how long it will be before something changes. In the cash soybean market, national average soybean basis bids averaged 60 cents under the August contract Friday, bringing the DTN National Soybean Index to $8.17 per bushel. There were 478 issues and stops in the daily deliveries report for the expiring July soybean futures contract, and 941 issues and stops for the expiring July soybean oil contract.

Wheat:

Wheat futures are lower Monday morning alongside corn and soybeans, dampening some of last week's overheated gains. The September Chicago wheat chart may eventually need a deeper correction in order to fill a gap between $4.93 and $4.96 1/2. TV footage of the Tour de France this weekend showed evidence of a dry growing season and lodged wheat now at harvest time, reminding us why global wheat consumers have been anxious to lock in prices with a recent flurry of futures-buying activity. There is potential for additional bullishness in the wheat and feed grains markets as dry weather continues in Ukraine and southern Russia while wheat heads are filling and corn plants are tasseling, increasing their chances of poor yields in 2018. Here in the U.S., wheat basis bids remained steady at the end of last week. The average cash price for SRW bushels was $4.89 Friday (26 cents under the September Chicago contract), and the average cash price for HRW wheat was $4.90 (23 cents under the September KC contract). The HRS Index was $5.33, or 25 cents under the September Minneapolis contract. There were 41 issues and stops in the daily deliveries report for the expiring July KC wheat futures contract representing warehoused Hard Red Winter wheat.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub