DTN Early Word Grains

A Quieter Start on Tuesday

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

December corn wasup 1 1/4 cents, November soybeans were down 2 1/4 cents, and September Chicago wheat was up 3 1/4 cents.

CME Globex Recap:

Investors are looking more relaxed early Tuesday with less talk about Turkey and most stock markets trading higher. Outside commodities are mixed with both gold and crude oil trading a little higher. Grains are also mixed as the panic of Friday's new USDA estimates appears to be easing.

OUTSIDE MARKETS:

Previous closes on Monday showed the Dow Jones Industrial Average down 125.44 points at 25,187.70 and the S&P 500 down 11.35 points at 2,821.93 while the 10-year Treasury yield ended at 2.88%. Early Tuesday, DJIA futures were up 100 points. Asian markets are mostly higher with Japan's Nikkei 225 down 498.65 (2.3%) and China's Shanghai Composite down 4.91 (-0.2%). European markets are modestly higher with London's FTSE 100 up 1.24 points (0.02%), Germany's DAX up 29.92 points (0.2%), and France's CAC 40 up 8.45 points (0.2%). The euro was up .0010 and the U.S. dollar index was down 0.03 at 96.29. September 30-year T-Bonds were down 10/32nds while December gold was up $2.70 at $1,201.60 and September crude oil was up $0.56 at $67.76. Soybeans on China's Dalian Exchange were slightly higher and Malaysian palm oil futures were up 0.4%.

BULL BEAR
1) IGC and USDA both estimate significant reductions in exportable world ending stocks of corn and wheat in 2018-19. 1) USDA estimated a record U.S. soybean crop and record corn yield on Friday.
2) Tuesday's seven-day forecast is wetter, but still not expecting much rain west of the Dakotas or in the western Canadian Prairie. 2) Futures spreads suggest bearish near-term demand for corn, soybeans, and all three wheats.
3) USDA estimated a 4% reduction in 2018-19 world wheat production in Friday's WASDE report. 3) China's 25% soybean tariff and ongoing trade war show no sign of letting up yet.

MORE COMMODITY-SPECIFIC COMMENTS

CORN December corn is up 1 1/4 cents early Tuesday, inching back after Friday's big drop related to USDA's estimate of a 14.59 billion bushel corn crop this fall. Tuesday's seven-day forecast is wetter and now includes most of the central U.S. with heavy amounts targeted for Missouri and northeastern Oklahoma. Overall, this if favorable for row crops and also offers benefits to the next winter wheat crops. This year's harvest is apt to come early as USDA said late Monday 26% of crops are already dented. Unless weather has a surprise in store the next month or so, corn prices are apt to remain under pressure into harvest, but then should benefit from more active world demand in 2018-19. For now, December corn is under pressure, seeking out a sideways range.

SOYBEANS November soybeans are down 2 1/4 cents early, still under pressure from Friday's record 4.59 billion bushel crop estimate from USDA, but also finding support at these cheaper prices. Similar to corn, soybean prices are likely to remain under bearish pressure into harvest as this week's forecast looks mostly favorable for row crops. USDA said 84% of soybeans are or have been setting pods, up from a five-year average of 72%. Barring surprise, the production side of the market looks sufficiently bearish and so far, there is no reason to doubt the bearishness of the current trade dispute with China. For anyone short the market however, it must be a little nerve-wracking, knowing that the trade situation could change unexpectedly at any time. The trend in November soybeans is currently sideways with prices near their lowest level in nine years and offering commercials attractive long-term value.

WHEAT September Chicago wheat is up 3 1/4 cents early Tuesday, a modest rebound from Monday's 13 1/4 cent drop. Most winter wheat areas in the U.S. are expecting rain the next seven days, which should be helpful for the next season of winter wheat planting. The sell-off of wheat prices the past two days however, was more likely about noncommercials being disappointed that USDA did not make more aggressive cuts to crop estimates on Friday and how prices failed to sustain trading above last year's high. Aside from the short-term disappointment, the fundamental situation is more bullish for wheat in 2018-19 than it has been in several years as exportable supplies of wheat are expected to end the season lower. The U.S. is this year's safe haven for wheat supplies with USDA estimating 935 million bushels of ending stocks. So far, U.S. export sales are showing no sign of increased activity. Even though winter wheat prices have fallen back from their 2018 highs, the trends for all three wheats remain up.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.25 -$0.01 -$0.31 Sep $0.003
Soybeans: $7.88 $0.07 -$0.81 Nov -$0.002
SRW Wheat: $5.06 -$0.12 -$0.27 Sep $0.015
HRW Wheat: $5.21 -$0.19 -$0.20 Sep $0.005
HRS Wheat: $5.44 -$0.16 -$0.49 Sep $0.000

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

Todd can be followed throughout the day on Twitter @ToddHultman1

(KR)

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Todd Hultman