DTN Before The Bell Grain Comments

Wheat Market Stays Hot

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

Morning CME Globex Update:

Row crop futures trade has been quiet so far Monday, with light gains that express the generally supportive environment from outside markets. In contrast, the futures contracts representing hard wheat varieties continue to rally and show double-digit gains.

Other Markets:

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

Corn:

Corn futures are 2 to 3 cents higher in relatively slow trade at the start of Monday's session. The new crop December contract has traded as high as $3.80 3/4 overnight, or 30 1/2 cents above its low from July 12. Threats of government dysfunction have caused the U.S. Dollar Index to head downward Monday morning, and a lower dollar typically allows dollar-denominated commodity prices to move upward, which is what we're seeing across a range of commodities, including such loosely related markets as crude oil, gasoline, cotton, coffee, and of course the grains and oilseeds. The DTN National Corn Index, an average of cash bids around the country, was $3.32 Friday, showing national average basis weaker at 30 cents under the September futures contract.

Soybeans:

There's potential for Monday afternoon's Crop Progress report to show diminished condition ratings for soybeans, after a weekend passed without offering any helpful precipitation in dry Wisconsin, Illinois, and Indiana. Some other dry regions where soybeans are currently filling pods, notably including the D3 Extreme Drought areas of northern Missouri, did experience some Sunday rain, although not enough to entirely change their yield outlook. The recent bounce in soybean prices has been mostly attributed to speculative traders covering short positions late last week, and these variable weather-related outlooks may not be bullish enough to motivate anything more than mild gains Monday. On Friday, nationwide average soybean basis weakened to 63 cents under the August contract, bringing the DTN National Soybean Index to $8.08 per bushel.

Wheat:

It's too far into the growing season for weather to greatly damage or improve European wheat and other small grains yields, but a persistent heat wave on the continent is nevertheless problematic, and it keeps global wheat prices on a bullish track at the start of the week. In the U.S. where supplies of milling-quality wheat are relatively more bountiful after the 2018 harvest, the Minneapolis, KC, and Chicago wheat futures markets are expressing a more bearish outlook in the nearby futures spreads, which represent the price of wheat storage over the next several months. The December-to-March carry spread is as wide as 17 cents for HRW and still 13 3/4 cents for HRS. The gut slot of spring wheat harvest will be ahead of us through the next couple of weeks. Wheat basis bids remained mostly steady on Friday. DTN's collected SRW Index came to $5.03 (28 cents under the September Chicago contract); the HRW Index came to $5.16 (17 cents under the September KC contract); and the Spring Wheat Index came to $5.55 (38 cents under the September Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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Elaine Kub