Morning CME Globex Update:
A suddenly stronger U.S. dollar and $1.50-per-barrel gains in the crude oil market suggest outside markets will be volatile Tuesday as a short trading week starts with broad macroeconomic uncertainty. Grains and oilseed futures are pulling back from Friday's short-covering gains.
|U.S. Dollar Index:||Higher|
Heavy rain fell in Kansas, Nebraska, and certain segments of the I states over the long weekend, and it is possible that corn lodging or other harvest difficulties will be a problem in coming weeks as the relatively early 2018 row crop harvest approaches; however, after futures prices bounced 8 1/2 cents on Friday, the market isn't eager to pursue additional gains Tuesday. Trading has been active so far Tuesday morning after the three-day break. The latest Commitments of Traders report showed speculators (Managed Money) growing more bearish about corn prices leading up to last Tuesday, shedding long futures and options positions and piling on about 3 times as many short futures and options positions. In the cash market for remaining old crop corn bushels, the DTN National Corn Index, an average of cash bids around the country, was $3.19 Friday, showing national average basis stronger at 46 cents under the December futures contract.
Not that Argentina was expected to be a huge exporter of soybeans in the 2018/19 marketing year anyway (only 8 million metric tons of exports projected in USDA's last set of numbers), but news of reinstated export taxes on Argentine grain, oilseeds, and soy crush products until the end of next year, amid the country's ongoing economic troubles and austerity programs, could motivate even fewer of their soybeans on to the open market. The bearishly-wide nearby soybean futures spreads in Chicago have tightened somewhat on the prospect of U.S. soybean inventories moving a little better than once feared. Bins will nevertheless fill up fast once harvest gets rolling. Friday's burst of short-covering ahead of the holiday weekend pulled the new crop November soybean chart more than 17 cents above its dangerous July low, and futures prices have lingered in mostly sideways trade since the overnight session began. In terms of cash soybean prices, the DTN National Soybean Index was $7.48 Friday after hitting a nine-year low last week. Basis bids are historically weak; the national average basis bid was 95 cents under the November contract Friday. Nearby bids are typically $1 under futures or more all across the Western Corn Belt, and as wide as $1.80 under in some portions of North Dakota and Minnesota.
Despite last week's rumors to the contrary, it turns out Russia will not be limiting its wheat exports in the present marketing year, and global wheat futures prices are falling by double digits in relief. This truly was a case of 'buy the rumor; sell the fact.' U.S. wheat futures contracts are now anywhere from 10 to 15 percent off the highs from early August's peak wheat panic and may now explore a sideways trading range. A sharply higher U.S. Dollar Index Tuesday morning is also adding pressure on commodity futures prices at the start of the session. DTN's collected SRW Index was $4.93 Friday, (average basis stronger at 53 cents under the December Chicago futures contract); the HRW Index was $5.08 (45 cents under the December KC contract); and the Spring Wheat Index was $5.36, showing basis bids recovering now that the gut slot of harvest has passed (63 cents under the December Minneapolis contract).
Elaine Kub can be reached at firstname.lastname@example.org
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