DTN Early Word Grains

Grains Mostly Lower, Gold Falls to New Lows

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

December corn was down 1/4 cent, November soybeans were down 4 1/4 cents, and September Kansas City (HRW) wheat was unchanged.

CME Globex Recap:

Global stock markets are mostly lower early Thursday with ongoing trade disputes still seen as a threat to world growth in 2018 and interest rates expected to go higher. Most commodities are also lower early Thursday with gold trading at new lows.

OUTSIDE MARKETS:

Previous closes on Wednesday showed the Dow Jones Industrial Average up 79.40 points at 25,199.29 and the S&P 500 up 6.07 points at 2,815.62 while the 10-year Treasury yield ended at 2.87%. Early Wednesday, DJIA futures were down 42 points. Asian markets are lower with Japan's Nikkei 225 down 29.51 (-0.1%) and China's Shanghai Composite down 14.71 (-0.5%). European markets are mostly lower with London's FTSE 100 up 15.95 points (0.2%), Germany's DAX down 33.07 points (-0.3%), and France's CAC 40 down 17.39 points (-0.3%). The euro was down .0049 and the U.S. dollar index was up 0.37 at 95.46. September 30-year T-Bonds were down 8/32nds while August gold was down $11.40 at $1,216.30 and August crude oil was down $0.82 at $67.94. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were down 0.3%.

BULL BEAR
1) Monday's lower USDA crop ratings for corn and soybeans gave prices a modest lift. 1) USDA's crop ratings for row crops are still higher than a year ago.
2) Commercials are net long soybeans, soybean oil, and Minneapolis wheat -- three commodities that have gotten cheap. 2) Fed Chairman Powell remains committed to gradual rate hikes in spite of trade policy concerns.
3) Chicago and K.C. wheat continue to hold above their 2018 lows. 3) With higher interest rates expected, new lows in gold are a bearish influence for commodity prices, in general.

MORE COMMODITY-SPECIFIC COMMENTS

CORN December corn is down 1/4 cent early Thursday, with rain in the eastern Dakotas and southeastern Iowa, expected to move into southern Minnesota later in the day and on to the eastern Midwest from there. This current pattern of moderate temperatures over most of the Corn Belt is mostly helpful to corn crops, but absolutely hellish in the southwestern Plains where the forecast remains dry and high temperatures are locked in triple digits the next several days. 4 a.m. CDT temperatures in central Texas are still in the mid-80s, which is especially tough on livestock. Technically, the trend in corn remains down, but the low near $3.50 in December corn may have been cheap enough to entice support. USDA's outlook for lower world corn supplies in 2018-19 remains one factor that could help prices find support above last year's lows.

SOYBEANS November soybeans are down 4 1/4 cents early as traders seem to be focusing more on the parts of the Midwest that are enjoying moderate temperatures and occasional rains. Problems at the margins like too much rain around northwestern Iowa and intense hot and dry conditions in the southern Plains are legitimate concerns with time for weather to still cause more problems with this year's soybean crops. The six to ten-day forecast does seem to offer some relief of above normal precipitation in the southwestern Plains and below normal temperatures that reach as far south as Oklahoma, but we'll have to see if that verifies. Thursday morning's weekly export sales report will be watched and shipments are likely to stay a little below USDA's estimated pace with time running out in 2017-18. So far, the trend in soybeans remains down with the seasonal low not due until early October.

WHEAT September K.C. wheat is steady early Thursday, a quiet start after a quiet day of trading on Wednesday. The winter wheat harvest continues to make progress and attention has turned to the spring wheat crop, which is doing very well in the U.S., but could use more rain in Canada. Spring wheat crops in north-central and northeastern Europe remain dry and southern Russia's reduced winter wheat crop is expecting further problems from rain at harvest time. World wheat production is expected to be down just 3% from a year ago, but exportable wheat supplies are expected to show their lowest ending stocks-to-use ratios since 2012. Fundamentally, these changes have shifted the outlook for wheat prices from bearish to neutral with no strong bullish arguments found yet. For now, the trends remain down for all three wheats while September Chicago and K.C. wheat are holding stubbornly above their 2018 lows -- signs of possible support.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.15 -$0.01 -$0.31 Sep -$0.055
Soybeans: $7.79 $0.10 -$0.60 Aug -$0.003
SRW Wheat: $4.72 $0.09 -$0.26 Sep -$0.004
HRW Wheat: $4.76 $0.06 -$0.15 Sep -$0.003
HRS Wheat: $5.05 $0.05 -$0.28 Sep -$0.002

Todd Hultman can be reached at todd.hultman@dtn.com

Todd can be followed throughout the day on Twitter @ToddHultman1

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Todd Hultman