Morning CME Globex Update:
U.S. wheat prices are still moving higher with European wheat prices, U.S. soybean prices are still moving according to the tariff rumor of the day (lower Wednesday), and corn prices are stuck in the middle. The weekly energy stocks report and the FOMC meeting aren't expected to contribute major volatility during the session
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The nearby September corn futures contract has been climbing at an average rate of a little more than 2 cents per day during the past three weeks of recovery, and although prices are 2 cents lower Wednesday morning, they are nevertheless still on track. Crude oil prices have slipped this week, and other outside markets are putting up a mixed performance Wednesday as past economic data looks favorable but future global growth remains in doubt. Some higher corn trade was noted overnight and could be re-established as the session wears on. The DTN National Corn Index, an average of cash bids around the country, was $3.42 Tuesday, showing national average basis steady at 30 cents under the September futures contract.
Soybeans are double digits lower Wednesday morning, but not leading any major sell-off throughout the sector. Even a hint or a hope of a better trading relationship with China, our Number One soybean customer, can cause soybean futures prices to leap upward by 28 cents, as we saw on Tuesday. Imagine what could happen if global trade really did go back to its previous, normal, dependable state! On the other hand, soybean traders now seem to be imagining what could happen if China retaliates against yet more U.S. tariffs that could be suggested in a fresh round of trade discussions. Rumors giveth, and rumors taketh away. So far, the new crop November soybean contract has stayed above $9 per bushel during the Wednesday pullback. The DTN National Soybean Index came to $8.41 Tuesday, showing average basis bids steady at 78 cents under the November futures contract.
The rallying Euronext milling wheat chart has powered through resistance and traded a fresh high of 208.50 Euros per metric ton Wednesday (equivalent to $6.64 per bushel), and although U.S. wheat futures are relatively more reluctant to rally, they are higher across the board as arbitrage keeps all global wheat prices moving roughly in the same direction. As spring wheat harvest gets going and merchandisers anticipate at least 20 percent more bushels than last year to come into their bins, due to increased acreage if not much increased yield, they continue to shade their basis bids. Average spring wheat basis weakened again by two cents Tuesday, to 41 cents under the September Minneapolis contract, bringing the Spring Wheat Index to $5.65. Winter wheat basis remained steady. The SRW Index was $5.26 and the HRW Index was $5.39.
Elaine Kub can be reached at firstname.lastname@example.org
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