DTN Before The Bell Grains

Light Upward Movement in Grain Prices

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

Morning CME Globex Update:

Except for the eager upward momentum in U.S. stock prices, the futures markets are relatively quiet Tuesday morning. Soy prices may continue bouncing sideways while the Brazilian real is stabilizing after recent losses, and the new crop soybean futures spreads keep expanding. A lower U.S. Dollar Index this week is supportive to dollar-denominated corn and wheat prices.

Other Markets:

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

Corn:

Row crop condition ratings didn't shift much in the weekly Crop Progress report, and a continued forecast for light showers across the heart of Corn Belt allows corn traders to remain confident about bearishly large supplies in the 2018/19 marketing year. On the other hand, there are regions in the northwestern Corn Belt and in the Southern Plains where more rain is needed, but not much is offered in the 6-10 day forecast. Sixty-one percent of U.S. corn fields are dented already, and 30 percent of Missouri's corn is now mature, so some of the most disappointing regional yield results will start filtering in to the market earlier than usual this year. For remaining old crop bushels, the DTN National Corn Index, an average of cash bids around the country, was $3.14 Monday, showing national average basis steady at 32 cents under the September futures contract.

Soybeans:

Soybean futures are tiptoeing lower Tuesday morning, and if steeper losses develop as heavier trading volumes arrive, the November chart has only 21 cents of room before hitting the July low. The $3.6 billion of "tariff aid" which will be bestowed directly to soybean farmers, according to the plan announced by the USDA Monday ($1.65 per bushel multiplied by 50 percent of expected production), won't influence the actual price of soybeans or the supply and demand of soybeans, except potentially to interfere with the soybean planting intentions that would otherwise be motivated by a freely-functioning market. In the cash market, the DTN National Soybean Index showed nationwide average basis bids weaker again on Monday, now 92 cents under the November contract, or $7.56 expressed as a flat price. In the Mississippi Delta, flat prices for soybeans are less than $8 per bushel, and in the northwestern regions of the Corn Belt, there are cash bids with a $6 as the first digit. At 8 a.m. USDA reported soybean meal sold to Mexico; 146,781mt for 2017-2018 delivery and 52,081mt for 2018-2019 delivery.

Wheat:

A friendlier, more normalized trading relationship with Mexico made headlines Monday, which is of course positive for U.S. grain markets, like the wheat market, which have convenient logistics for shipping to Mexico. KC wheat futures, representing Hard Red Winter wheat, were leading the wheat sector Tuesday morning with gains of more than 4 cents per bushel. Wheat farmers, too, will get a check from the government as part of the USDA's tariff aid package: 14 cents per bushel multiplied by 50 percent of 2018 production. DTN's collected SRW Index was $4.72 Monday, (average basis stronger at 27 cents under the September Chicago futures contract); the HRW Index was $4.83 (still 19 cents under the September KC contract); and the Spring Wheat Index was $5.09, showing basis bids starting to strengthen (48 cents under the September Minneapolis contract) now that the gut slot of harvest has passed. Spring wheat harvest was officially measured at 77 percent complete as of Sunday night's Crop Progress observations.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub