DTN Before The Bell Grain Comments

Grains Stay Inside Recent Trading Ranges

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

Morning CME Globex Update:

Outside markets' influence should be seen as mixed Tuesday morning, with a stronger U.S. dollar adding the most pressure to grain prices. Spurts of buying interest have been noted in the soybean futures market during the early part of the session, suggesting that there may be enough support for grains and oilseeds at these prices to at least prevent another meltdown and or another test of last week's lows. At 8 a.m. USDA reported Mexico cancelled 152,000 mt of sorghum for 2017-2018 delivery.

Other Markets:

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

Corn:

As on Monday, corn prices are starting Tuesday morning with a lower tone but staying several cents above last week's contract lows, and that's about the only promising thing that corn market bulls can observe right now. Quick accumulation of heat units this summer has allowed the U.S. crop to start tasseling and pollinating kernels much faster than usual (37 percent of corn fields silking Sunday night and 47 percent of soybean fields blooming already). As long as the weather forecast for the Corn Belt doesn't suggest stressfully hot temperatures (which it doesn't at the moment), then the early progress shouldn't be a problem and could potentially allow an earlier-than-usual harvest, which would just bring this year's 14 billion bushels of corn to market earlier than usual. The DTN National Corn Index, an average of cash bids around the country, was $3.22 Monday, showing national average basis stronger at 32 cents under the September futures contract. There were 243 issues and stops in the daily deliveries report for the expiring July corn futures contract. At 8 a.m. USDA reported 60,000 mt of corn sold to Egypt in 2017-2018 and 53,000 mt for 2018-2019.

Soybeans:

Soybean futures charts now have a 40-cent range inside of which they can float up or down without expressing any change or continuation of a trend. Instead, the market seems to be stuck in neutral, contemplating its new reality now that China's retaliatory tariffs may be 'priced in.' USDA's monthly World Agricultural Supply and Demand Estimates are coming up on Thursday, with the potential to pop the soybean market into gear one way or another. USDA has indicated it will include the economic implications of those tariffs into its supply and demand projections, so traders may expect to see bearish adjustments to soybeans' export prospects. This market's particular sensitivity to export projections can be seen in the new crop soybean-to-corn price ratio, which has gone from more than 2.6-to-1 at the start of 2018 to now less than 2.4-to-1. In the cash soybean market, nationwide soybean basis bids averaged 60 cents under the August contract Monday, bringing the DTN National Soybean Index to $7.96 per bushel. There were 478 issues and stops in the daily deliveries report for the expiring July soybean futures contract and 869 issues and stops for the expiring July soybean oil contract.

Wheat:

With the U.S. Dollar Index higher Tuesday morning and last week's burst of bullishness from the European wheat market apparently past us, wheat futures are spending Tuesday morning in lower territory alongside corn and soybeans. Just like the row crops, small grain crops this year are showing faster-than-usual biological progress, with 81 percent of spring wheat heading as of Sunday night when the 5-year average suggests we should expect only 69 percent heading by now. Condition ratings for the crop improved over the past week, and now a full 80 percent of U.S. spring wheat fields are considered either 'good' or 'excellent,' and the weather forecast for the Northern Plains also favors the maturing crop. The average cash bid for Soft Red Winter wheat Monday was $4.83; for Hard Red Winter wheat was $4.84 (22 cents under the September KC contract); for Hard Red Spring wheat was $5.26; and for Soft White wheat was $5.32. There were 77 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