DTN Before The Bell Grains

Morning CME Globex Update:

Corn, soybean, and wheat prices are pursuing neutral paths, supported above their recent lows. A wet weather forecast isn’t necessarily friendly for the upcoming harvest, but any potential damage from Tropical Storm Gordon has been outweighed by the overwhelmingly bearish outlook for large new crop grain inventories to be harvested sooner than usual.

Other Markets:

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

Corn:

Corn futures have stayed inside a tight 3 1/2-cent trading range so far Thursday and may continue the day lower alongside other commodity markets. Tropical Storm Gordon has killed one, cut power in some regions, but is otherwise not damaging oil production or heavily influencing commodity prices. Heavy rain will, of course, disrupt row crop harvesting activities in the Delta states, and flooding in Missouri will damage standing corn where the stalks may already be weak after a dry summer. Worries about damage to standing crops will extend across the Corn Belt as the rain forecast persists in the southern and eastern Corn Belt through the week. However, the futures market remains generally unconcerned about corn supplies in coming months and is instead still confident about seeing large inventories. The December-to-March futures spread is 12 cents Thursday morning, suggesting peak bearishness may have hit last week, but commercial traders are nevertheless expecting to store a lot of corn into the 2019 calendar year. The DTN National Corn Index, an average of cash bids around the country, was $3.22 per bushel Wednesday, with nearby cash corn bids averaging 43 cents under the December futures contract.

Soybeans:

Soybean futures were able to hold on to small gains Thursday morning while the U.S. dollar corrected itself downward, but the market will be vulnerable to losses throughout the trading session while corn and wheat are experiencing active selling. Nothing is changing in the poor U.S.-China trading relationship at the moment; no meetings or negotiations are currently scheduled. So soybean prices offered at the PNW and the Gulf must still reflect a discount for China's retaliatory soybean tariffs amid the ongoing trade war, right during the timeframe when this country typically expects fall export business to start building. The DTN National Soybean Index was $7.40 Wednesday, with some nearby cash bids as ugly as $6.50 per bushel in the northern and western portions of the Corn Belt most dependent on shipping beans by rail. The national average basis bid keeps weakening: 98 cents under the November futures contract Wednesday.

Wheat:

U.S. and European wheat futures are lightly lower Thursday despite ongoing dryness in Australia and a relatively bullish Canadian grain stocks report. Stats Canada showed end-of-July total wheat inventory down 9.9 percent compared to this time last year, after a strong year of exporting high-quality milling wheat. On-farm stocks increased 15 percent as farmers were willing to carry the grain themselves. That strategy may be successfully echoed in the United States, where the December-to-March futures spread for KC HRW wheat is presently 22 cents, offering a better return to space than corn and relatively less headache than storing soybeans. DTN's collected SRW Index was $4.72 Wednesday, (average basis steady at 49 cents under the December Chicago futures contract); the HRW Index was $4.86 (42 cents under the December KC contract); and the Spring Wheat Index was $5.17 (63 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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