Morning CME Globex Update:
Condition ratings for U.S. corn and soybean fields fell slightly in this week's Crop Progress report, but the overall production expectations in 2018 are still large: 14.59 billion bushels of corn and 4.59 billion bushels of soybeans. Tuesday morning's lightly higher futures prices are a mild recovery of previous losses while the quiet outside markets offer the chance.
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Lightly higher corn futures prices Tuesday morning are likely a reflection of the quiet outside markets and the opportunity to correct recent losses, rather than an urgent bullish change in sentiment after this week's Crop Progress report. Nevertheless, the observed conditions weren't great. Corn's 'good' to 'excellent' ratings fell 1 percentage point over the past week to 70 percent. Although some might pooh-pooh falling condition ratings this time of year while the crop naturally starts drying down, traders should not dismiss the large pockets of the Corn Belt which haven't had sufficient soil moisture for adequate grain fill. Even in the major corn-producing "I" states (Iowa, Illinois, Indiana), 6 to 9 percent of fields are now rated 'poor' or 'very poor.' The DTN National Corn Index, an average of cash bids around the country, was $3.25 Monday, showing national average basis stronger at 31 cents under the September futures contract.
The agriculture industry is gearing up for an early harvest this year, especially after seeing the latest Crop Progress report which showed 84 percent of soybean fields setting pods already, compared to 72 percent average at this time of year. Condition ratings fell over the past week, with 1 percentage point fewer fields now rated 'good' or 'excellent.' Globally, futures markets for Malaysian palm oil and Canadian canola are pursuing a neutral sideways track, and for soybeans to follow this pattern in the oilseed sector, they are moving somewhat higher Tuesday morning to neutralize recent losses. This is the last trading day for August soybeans, soybean meal, and soybean oil futures contracts. The DTN National Soybean Index came to $7.88 Monday, showing average basis bids steady at 81 cents under the November futures contract. Compared to what would be "normal" for this time of year, basis bids at the Gulf, at Midwestern processors, and at country elevators are all depressed by 20 to 30 cents, ostensibly due to the tariff situation and resulting dearth of upcoming export business.
Global wheat markets, which were spooked by USDA's bearish worldwide production estimates last week, filled the gap left on their futures charts and on Tuesday are re-asserting some strength and genuine concern about milling-quality wheat supplies globally. In the U.S., more and more hard red spring wheat gets harvested and becomes available to the market every day, and there have been no widespread problems with quality or protein this year. As of Sunday night, the harvest was considered 35 percent complete in the weekly Crop Progress report, and 75 percent of spring wheat fields were considered in 'good' or 'excellent' condition. DTN's collected SRW Index was $5.06 Monday, showing stronger basis at 27 cents under the September Chicago futures contract; the HRW Index was $5.21 (steady at 20 cents under the September KC contract); and the Spring Wheat Index was $5.44, with a steady but still relatively-weak harvest-time basis of 49 cents under the September Minneapolis contract.
Elaine Kub can be reached at email@example.com
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