DTN Early Word Grains
Choppy, Lower Leaking Trade Continues
December corn was unchanged, November soybeans were down 3 cents, and December K.C. wheat was down 1.75 cents.
CME Globex Recap:Mixed equity markets around the globe, although the US Dollar Index is posting decent gains for early morning trade. Emerging market currencies continue to find themselves under pressure which can be a headwind for commodities. Grains have traded both sides multiple times overnight which looks as though it will lend itself to a two-sided day session.
OUTSIDE MARKETS:Previous closes on Wednesday showed the Dow Jones Industrial Average down 88.69 points at 25,733.60 and the S&P 500 down 1.14 points at 2,861.82 while the 10-year Treasury yield ended at 2.82%. Early Thursday, DJIA futures were down 7.00 points. Asian markets are mostly higher with Japan's Nikkei 225 up 48.27 (0.22%) and China's Shanghai Composite up 10.02 (0.37%). European markets are mixed with London's FTSE 100 up 5.73 points (0.08%), Germany's DAX down 14.66 points (-0.12%), and France's CAC 40 up 6.00 points (0.11%). The euro was down 0.0033 at 1.1565 and the U.S. dollar index was up 0.25 at 95.34. September 30-year T-Bonds were up 1/32nds while December gold was down $8.90 at $1,194.40 and October crude oil was down $0.08 at $67.78. Soybeans on China's Dalian Exchange were down a few ticks.
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| BULL | BEAR | ||
| 1) | Domestic demand for corn and soybeans remain strong and continue to outpace levels needed to meet USDA estimates. | 1) | Various private crop tours continue to find solid yield potential for both corn and soybeans. |
| 2) | Depending on weekly export sales data out later this morning, new crop corn and soybean export sales as of last week were 54% and 44% ahead of last year at this time, respectively. | 2) | Technical chart patterns for most wheat charts have a bearish tilt and suggest further momentum-based selling could take place. |
| 3) | Domestic basis levels for wheat are slowly improving as commercials compete to fill up available storage before fall harvest. | 3) | Based on current new crop prices, hard red winter wheat acre are likely to see the first year-over-year increase since 2014/15. |
CORN December corn has witnessed both sides in the overnight session, trying to avoid closing lower for a fifth straight session. Similar to wheat, technical chart patterns in corn are not positive and calendar spreads are at or setting new contract lows. Managed funds remain net short the corn market, but neither basis nor spreads suggest commercial traders are interested in taking a stand at these flat price levels. Weekly ethanol production reported yesterday morning was up 1,000bbls/day to 1.073 million bbls/day, which was up 2.0% from the same week a year ago. With only two weeks of reporting left, it would appear USDA will need to slightly increase their ethanol demand for corn estimate. Cash basis around the Midwest continues to be in focus as the general consensus this fall is farmers will store as many soybeans as possible while selling corn off the combine to make room. This would obviously go against the trend of the last few years, altering normal marketing patterns slightly.
SOYBEANS November soybeans are posting small losses this morning, weighed on by beneficial finishing weather and large anecdotal yield reports from private crop tours. All signs continue to point toward a record soybean crop, overwhelming demand and helping produce the largest projected carryout figure on record. Two-week percent of normal precip maps from NOAA show major moisture deficits across North Dakota, northern Minnesota and parts of southeast Iowa. However, the rest of the belt has been amply-watered with record potential present in many areas. Basis at both the PNW and Gulf remain anemic with "no bid" being reported from the PNW and +10-14X at the Gulf. While export sales are running sharply ahead of last year for the 18/19 marketing year, cash and spreads would suggest sales will be slowing swiftly in coming weeks. Crush margins remain impressive at $1.55/bu nearby although off the highs from July near $1.90. Calendar spreads are sitting on contract lows and when combined with weak cash does not imply higher flat prices in the offing.
WHEAT Mixed to weaker wheat markets after a firmer start last night. Wheat remains stuck between a rock and a hard place with USDA forecasting much improved export demand in the second half of the year while first quarter wheat exports were some of the lowest on record. The winter wheat insurance pricing period is taking place this month and part of next, a price which should promote more acres to be sown. US FOB offers continue to play a cat and mouse game with competitor origins, selling off most of the week to get close to connecting on some business before a rally pushes the US away from the table. Given where the crop problems were this year, any sustainable rally needs to be led by Paris and Black Sea futures. The best rainfall chances for the east coast of Australia are also on tap this weekend which could help their national production ideas creep back toward 20MMT. Export sales later this morning will help confirm whether last week's strong sales was the start of a trend or merely a one-week blip.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.21 | -$0.08 | -$0.32 | Sep | -$0.003 |
| Soybeans: | $7.84 | -$0.18 | -$0.86 | Nov | -$0.023 |
| SRW Wheat: | $4.97 | -$0.02 | -$0.29 | Sep | -$0.008 |
| HRW Wheat: | $5.11 | -$0.04 | -$0.19 | Sep | $0.006 |
| HRS Wheat: | $5.38 | -$0.02 | -$0.48 | Sep | $0.009 |
Tregg Cronin can be reached at tmcronin31@gmail.com
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