DTN Before The Bell Grains

Condition Ratings and Prices Dip Lower

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

Morning CME Globex Update:

Grain and oilseed prices are lower Tuesday morning while investors sell futures to express their risk aversion across a variety of markets. Monday's condition ratings suggested row crops are drying down toward an early harvest, and the weather forecast offers some helpful late-season rain.

Other Markets:

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

Corn:

New crop December corn futures are down a penny Tuesday morning and have stayed inside a narrow 7-cent trading range so far this week, which would seem calm except for the streaky movement going on in soybeans and wheat and outside currency and commodity markets. In an unusual pattern, the dollar was lower overnight, but dollar-denominated commodity prices didn't necessarily see a boost. Instead, global investors were expressing widespread risk aversion. Gold prices were up $8.50 overnight, over $1200 per troy ounce, amid fundamental concerns about the stability of the economy and the willingness of the Federal Reserve to address it. The corn market itself maintains a status quo of stable demand and large production expectations. Harvest is likely to be early across the Corn Belt (44% of U.S. corn kernels are dented already). From the DTN Digital Yield Tour 2018, powered by Gro Intelligence, nationwide average corn yield has been estimated at 174.99 bushels per acre (bpa), which is substantial but is also bullishly 2% lower than USDA's most recent estimate. In the old-crop cash market, the DTN National Corn Index, an average of cash bids around the country, was $3.31 Monday, showing national average basis steady at 31 cents under the September futures contract.

Soybeans:

Once trading volume picks up Tuesday, soybean futures prices may continue to recover after lingering in lower territory overnight. Row-crop conditions ratings continued to dip in the weekly Crop Progress report, which isn't unusual at this point in the season. In dry Missouri, the seventh-largest soybean-producing state in the nation, with desirably high-protein soybeans, 37% of fields are still rated either 'very poor' or 'poor.' However, beneficial rain is expected in this week's forecast for most of the region while soybean plants continue to fill their pods. The DTN National Soybean Index was $8.10 Monday or 83 cents under the November futures contract, showing basis bids are steady but still dramatically weakened by the ongoing trade war. The USDA reported export sales of 250,000 metric tons of soybean cake and meal for delivery to unknown destinations during the 2018-19 marketing year.

Wheat:

Winter wheat harvest is finishing up in the Northwest, and U.S. spring wheat harvest was pegged at 60% complete as of Sunday night's Crop Progress observations. Reports from the combines suggest overall yields and proteins are strong but not spectacular. Global wheat prices have been streaking an average of 13 cents per day lately, in one direction or another, as traders try to evaluate the realistic availability of exportable milling wheat while virtually every wheat-exporting country has been harmed in some way by a hot, dry summer. The net result has been mostly neutral, and the nearby Minneapolis spring wheat futures chart, for instance, at $5.89 is almost exactly where it was a week ago. DTN's collected SRW Index was $5.14 Monday, (average basis still at 28 cents under the September Chicago futures contract); the HRW Index was $5.28 (19 cents under the September KC contract); and the Spring Wheat Index was $5.46, 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