Morning CME Globex Update:
Volatility in emerging market currencies is sending the U.S. dollar higher Wednesday morning and putting pressure on dollar-denominated grain and oilseed futures prices. Corn and soybean prices are otherwise pursuing neutral paths, supported above their recent lows. A wet weather forecast isn't necessarily friendly for the upcoming harvest.
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Corn futures have experienced a nice 14-cent bounce since posting last week's lows but are quiet along a neutral path Wednesday morning. Tropical Storm Gordon may soon weaken into a tropical depression, but it's nevertheless expected to send heavy rain into the Delta region, complicating row crop harvest. Texas corn harvest passed the halfway mark in this week's Crop Progress report. More rain throughout the week in the more central portions of the Corn Belt will stymie corn silage harvest, and not help grain full much at this stage, and instead potentially damage stalk strength before harvest, to say nothing of the flash flood potential in Wisconsin, Iowa, Nebraska, and Kansas. Other than those threats, however, the nation's corn still looks pretty good, with 67 percent rated either 'good' or 'excellent,' and an 11-cent futures spread between the December and March contracts suggests commercial elevators are expecting to handle large inventories. As farmers sweep their grain bins of their remaining old crop bushels, the average cash corn bid in the country was 44 cents under the December contract Tuesday, steady, making the DTN National Corn Index, an average of cash bids around the country, $3.24 per bushel. At 8 a.m. USDA reported 101,736 mt of corn sold to Mexico for delivery in 2018-2019.
The U.S. Dollar Index has jumped higher this week and the Brazilian real continues to languish near four-year lows (to say nothing of the fresh bearish volatility in the Mexican peso, South African rand, and Russian ruble Wednesday morning), all of which are bearish to dollar-denominated soybean futures, but bargain-hunting buyers have stepped in to support soybean prices and keep them away from fresh nine-year lows. The DTN National Soybean Index was $7.47 Tuesday, or only 10 cents off last week's dramatic low. Basis bids are still historically cheap and getting cheaper as soybean harvest begins in Mississippi and Arkansas: the average country bid in the U.S. was 97 cents under the November contract Tuesday. 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. This is of course because the prices offered at the PNW and the Gulf must reflect a discount for China's retaliatory soybean tariffs amid the ongoing trade war with the U.S., right during the timeframe when this country typically expects fall export business to start building. Nothing is changing in that China relationship at the moment; no meetings or negotiations are currently scheduled.
Coming rain will be welcome in the still-dry Southern Plains ahead of winter wheat planting season. Kansas and Nebraska are just getting started on that task, with 1 percent of intended winter wheat fields already planted as of Sunday night's Crop Progress observations. Wheat futures prices are moving lightly higher Wednesday morning which, as the second trading day in this shortened week, seems to be taking the place of a typical Turnaround Tuesday. The big move so far this week was the double-digit losses after Russia made clear it would not be limiting wheat exports in this marketing year. DTN's collected SRW Index was $4.83 Tuesday, (average basis stronger at 49 cents under the December Chicago futures contract); the HRW Index was $4.95 (42 cents under the December KC contract); and the Spring Wheat Index was $5.23, showing basis bids recovering now that the gut slot of harvest has passed (62 cents under the December Minneapolis contract). U.S. spring wheat harvest was pegged at 87 percent complete in this week's Crop Progress report. The Canadian prairies should have clear weather for harvest this week, which may allow them to work toward the halfway mark.
Elaine Kub can be reached at firstname.lastname@example.org
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