DTN Before The Bell Grain Comments

Higher Dollar Pressures Row Crop Prices

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

Morning CME Globex Update:

Futures contracts representing hard wheat varieties are the only ones posting gains Thursday morning while global production concerns affect that market, but U.S. production prospects for corn and soybeans are bearish. With the U.S. Dollar Index at a fresh one-year high, all commodity prices may experience pressure. The weekly export sales report showed 641,000 mt old crop corn, 774,500 mt new crop corn, 252,300 mt old crop soybeans, 613,400 mt new crop soybeans, and 300,000 mt of wheat sold.

Other Markets:

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

Corn:

Bit by bit, the corn futures market has worked its way higher during the past three trading sessions but is seeing lightly lower movement Thursday morning. The ethanol production reported this week showed resurgent old crop corn demand to produce 1.064 million barrels of ethanol per day, 4 percent more than last year at this time. And it's being gobbled up by eager summer drivers: stocks of motor gasoline in general and fuel ethanol specifically are being drawn down week over week. Now if only corn's export prospects can support the market as well as the domestic consumption prospects do, the futures charts might be able to sustain some higher prices through the week. This week's export sales progress was rather strong, especially for old crop corn: 641,000 metric tons of sales in the 2017/18 marketing year (and 774,500 mt of sales for the 2018/19 marketing year). Cash grain bids collected Wednesday afternoon showed the average basis bid grew stronger, to 30 cents under the September futures contract, and the DTN National Corn Index was $3.17 per bushel.

Soybeans:

The weekly export sales report showed 252,300 metric tons of soybean sales in the 2017/18 marketing year and 613,400 mt of sales in the 2018/19 marketing year, and those numbers received a neutral response from the futures market during this season when U.S. sales aren't traditionally strong, anyway. A higher trend in the U.S. Dollar Index is starting to be threatening to dollar-denominated commodity futures contracts, even those like soybeans which have already experienced heavy recent losses. With gains of half a percent Thursday morning, the U.S. Dollar Index has broken through previous resistance and is now higher than it's been since last July. The new crop November soybean contract is posting small losses, but is so far keeping at least 25 1/2 cents above this week's freshly-established contract low. On Wednesday, nationwide average soybean basis remained steady at 60 cents under the August contract, bringing the DTN National Soybean Index to $7.82 per bushel.

Wheat:

Winter wheat harvest continues apace in the High Plains region, when the combines can dodge the thunderstorms that remain in the 6-10 day forecast. Reported export sales of only 300,000 metric tons of wheat may be seen as bearish to the long-term progress of the market. The driver of much of the global wheat market's recent bullishness has been the dry weather and poor harvest reports in Europe and the Black Sea region, but the December Paris Euronext milling wheat contract found resistance again Wednesday and may not be able to rally any farther above current levels. In the U.S. cash wheat market, winter wheat basis bids remained steady Wednesday. DTN's collected SRW Index came to $4.69 (26 cents under the September Chicago contract); the HRW Index came to $4.72(15 cents under the September KC contract); and the Spring Wheat Index came to $4.99 (29 cents under the September Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub