DTN Before The Bell Grain Comments

Grains Likely to Post July Gains

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

Morning CME Globex Update:

Light gains were made for corn, soybean, and all three varieties of wheat futures Tuesday morning, extending the corrective bounce that grains and oilseed have experienced since the lows of July 12. Outside market influence appears relatively quiet, with a lower U.S. dollar acting as support for grain prices.

Other Markets:

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

Corn:

Corn trading volumes were relatively light Tuesday morning, matching the quiet mood of most commodity markets. Nearby September corn prices are more than 30 cents above their low from July 12, and it looks likely that the month will close out with a monthly gain of about a dime. The U.S. Dollar Index is slowly sinking lower again, which is supportive to dollar-denominated commodity prices. The U.S. corn crop's condition ratings were left unchanged in the weekly Crop Progress report, wherein 72 percent of fields were still rated either 'good' or 'excellent,' and only 9 percent were considered either 'poor' or 'very poor.' These are historically lush condition ratings, compared to last year's 61 percent good-to-excellent rating, for instance, when ultimate corn yield came to 176.6 bushels per acre. The DTN National Corn Index, an average of cash bids around the country, was $3.37 Monday, showing national average basis steady at 30 cents under the September futures contract.

Soybeans:

Row crop growth stages continue to advance ahead of pace, with 60 percent of U.S. soybean fields already setting pods at a time when the 5-year average would only expect 41 percent of fields to be at that point already. This makes the current weather and the nearby weather forecast even more influential to new crop soybean prices than usual, but for now, that forecast appears to show mostly adequate soil moisture and favorable temperatures for the core soybean growing regions. The 5- to 6-cent gains of the morning may be the result of continued short futures liquidation; total open interest in soybean futures has fallen 6 percent over the past week. Tuesday July 31 is First Notice Day for expiring August soybean, soybean meal, and soybean oil futures contracts. The DTN National Soybean Index came to $8.13 Monday, also expressed now as 78 cents under the November futures contract.

Wheat:

The gut slot of spring wheat harvest will occur over the next couple of weeks, and a few test swaths are already being taken from fields across the Northern Plains. Although the condition ratings reflect a crop that experienced beautiful late-season weather (78 percent 'good' or 'excellent'), the stress from a dry spring may have ultimately carried over into the wheat plants' final yield results, and the anticipated extra supply this year should likely be attributed mostly to the higher planted acreage number, rather than to improved yields. Tighter Minneapolis futures spreads Tuesday morning suggest that commercial wheat merchandisers are carefully re-assessing their yield estimates. On the global wheat market, milling quality wheat will find a relative scarcity of competition, with dry weather concerns affecting European, Russian, Canadian and now Australian production in 2018. The Euronext milling wheat contract is higher again Tuesday morning and could potentially extend its rally and spark another burst of trend-following participation. In the U.S. cash wheat market, winter wheat basis bids remained steady on Monday. DTN's collected SRW Index came to $5.18 (28 cents under the September Chicago contract); the HRW Index came to $5.31 (17 cents under the September KC contract); and the Spring Wheat Index came to $5.62 (once again resisting the futures gains with a weaker basis bid of 39 cents under the September Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub