DTN Before The Bell Grains

European Grain Bullishness Heats Up Again

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

Morning CME Globex Update:

A lower dollar and higher crude oil prices Friday morning generally point the commodity sector upward, but changes in the direction of grain and oilseed trade are likely throughout the session as futures volume develops.

Other Markets:

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

Corn:

Showers are expected across the heart of the Corn Belt this weekend, which would be favorable to filling grain and may keep a lid on futures traders' bullish urges Friday. Trading volumes have started out rather slow this morning, but activity could certainly heat up through the day, and with the U.S. Dollar Index still pulling back off Wednesday's high, commodities might otherwise lean upward. This is the season for counting kernels and estimating yields, with greater confidence now that the corn crop has matured so quickly. DTN's 2018 Digital Yield Tour, which takes place August 15 -- 20 and includes data analytics from Gro Intelligence, has highlighted large but not record-breaking corn yields in the northern Corn Belt. The county-by-county digital yield model may ultimately suggest USDA's nationwide projection for 178.4 bpa average corn yield is too aggressive. The DTN National Corn Index, an average of cash bids around the country, was $3.34 Thursday, showing national average basis steady at 31 cents under the September futures contract.

Soybeans:

Soybean prices are lightly lower Friday morning to trim the overheated gains of the previous session. Just a hint of trade dialog between the U.S. and China, the world's two largest economies, was enough to make soybean prices rally 30 cents on Thursday, so imagine what real negotiation results could do for the market! The DTN National Soybean Index came to $8.14 Thursday, showing average basis bids weaker at 83 cents under the November futures contract as the implications of weaker nearby Gulf bids trickled through to Midwestern processors and country elevators. Clearly, futures speculators' sudden optimism about trade talks hasn't actually been matched by real cash business yet.

Wheat:

Wheat futures are popping up by double digits Friday morning, as Europe braces for more hot weather in next week's forecast while feed grain crops are still developing. Futures trading volume on the Euronext futures exchange is notably lower in August than it was during July's wheat rally, so sudden streaky gains like we've seen on Friday are somewhat suspect, but U.S. wheat futures prices seem willing to play along. Chicago, KC, and Minneapolis wheat futures all achieved double-digit gains early Friday in the wake of the nearby Paris contract rising 6 Euros per metric ton (equivalent to about 19 cents per bushel). DTN's collected SRW Index was $5.14 Thursday, (average basis at 28 cents under the September Chicago futures contract); the HRW Index was $5.28 (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

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Elaine Kub