DTN Before The Bell Grains

Grains Lower Mid-Week

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

Morning CME Globex Update:

Risk-averse investors are flocking to the U.S. dollar Wednesday morning, driving up the Dollar Index and subsequently pressuring commodity prices. A favorable weather forecast with rain in the Corn Belt only adds to the bearishness for row crop futures prices.

Other Markets:

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

Corn:

Corn prices are lower Wednesday morning alongside continued economic worries in Turkey (the second-largest export customer for U.S. dried distillers grains). In relation to emerging markets' currencies, the U.S. Dollar Index has surged to a fresh yearly high, which is typically bearish to dollar-denominated commodities. The fundamental corn production outlook isn't perfect in 2018. Even in the major corn-producing "I" states (Iowa, Illinois, Indiana), 6 to 9 percent of fields are rated 'poor' or 'very poor' and vulnerable to dry weather late in the season as kernels fill with weight, but the weather forecast through this week includes favorable precipitation for the Corn Belt, adding to the overall supply bearishness of the new crop market. The DTN National Corn Index, an average of cash bids around the country, was $3.31 Tuesday, showing national average basis steady at 31 cents under the September futures contract.At 8:00 a.m. USDA reported 114,572 mt corn sold to unknown destinations, 55,000mt for 2017-2018 and 59,572 for 2018-2019.

Soybeans:

The soy complex is leading the losses in the grain and oilseed sector Wednesday morning, with November soybeans down 7 cents but still above $8.70 per bushel and on a neutral sideways path. NOPA will release its monthly Crush Report on Wednesday, expected to show a strong 161.745 million bushels of soybeans processed during July. The DTN National Soybean Index came to $8.01 Tuesday, showing average basis bids stronger at 78 cents under the November futures contract. Nationwide basis levels, especially the bids for exportable soybeans, will be prone to get suddenly stronger if autumn export business develops and/or if the ongoing trade war with China ever gets resolved.

Wheat:

Drought continues to threaten Australian winter wheat production in 2018, and KC wheat futures which represent Hard Red Winter wheat comparable to Australia's milling wheat crop are seeing some lightly higher prices Wednesday. Strength in wheat futures is unique while most of the outside markets are showing distinctly bearish, risk-off attitudes. U.S. stock markets are anticipating steep losses Wednesday amid widespread global economic concern, and a higher dollar pressures wheat prices. DTN's collected SRW Index was $5.14 Tuesday, showing weaker basis at 28 cents under the September Chicago futures contract; the HRW Index was $5.26 (steady at 20 cents under the September KC contract); and the Spring Wheat Index was $5.47, with a steady but still relatively-weak harvest-time basis of 49 cents under the September Minneapolis contract.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub