DTN Before The Bell Grains

Grains in Holding Pattern

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

Morning CME Globex Update:

A favorably large amount of new crop corn export sales business was shown in the weekly export sales report Friday morning, but the grain futures markets are likely to remain in quiet consolidation ranges. The August jobs report showed another 201,000 jobs and unemployment steady at 3.9 percent.

Other Markets:

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

Corn:

The weekly export sales report released Friday morning showed the 2017/18 row crop marketing year ended with a whimper (30,100 metric tons of corn sold and 600 metric tons of soybeans sold in the week leading up to August 30), but corn futures prices were unphased. The new crop 2018/19 sales data was much better -- 1,032,900 metric tons of corn sales, including steady business from Mexico. The Delta and the Eastern Corn Belt are bracing for continued heavy rain and local flooding in the next couple of days, which is extremely unhelpful for grain and silage harvest. A drier pattern is expected to follow next week, and the large 2018 corn harvest is expected to proceed eventually. The DTN National Corn Index, an average of cash bids around the country, was $3.23 per bushel Thursday, with nearby cash corn bids growing weaker, on average, to 44 cents under the December futures contract.

Soybeans:

So far during Friday's trade, the November soybean contract has kept quietly inside the narrow 8-cent trading range where it was trapped Thursday. This week's sideways consolidation leaves the chart only 10 cents above July's low, and although buyers have supported the market here and all the bearish considerations are already well known, including a poor trading relationship with China and large new crop supplies expected to be harvested soon, there aren't any sources of positive news to turn the trend upward, either. The frontrunner for Brazil's upcoming presidential election was stabbed during a rally Thursday, and currency trading has been understandably volatile Friday, with the real pulling 4 percent above its recent low. In the U.S., this week's export sales report was neutral for soybeans, showing 672,600 metric tons of 2018/19 soybean sales. Futures trading volumes have been relatively light in recent sessions, but the activity has tended toward the slow building of net bullish open interest as bargain hunters judge the most likely direction for $8 beans to move is upward. Nearby futures spreads are as wide (bearish) as ever. The DTN National Soybean Index was $7.41 Thursday, with the national average basis bid steady at a terribly weak 98 cents under the November futures contract.

Wheat:

After dropping 9 cents in the previous session, wheat futures are lightly lower Friday morning alongside corn and soybeans, and the entire sector's slump is in line with the sagging stock market and crude oil market this week. However, there will be a monthly round of USDA World Agricultural Supply and Demand estimates coming up next Wednesday (September 12), and grain futures could attract growing volumes of trade during coming sessions. The weekly export sales report was bearish for wheat, with only 379,800 metric tons of sales documented. DTN's collected SRW Index was $4.64 Thursday, (average basis weaker at 50 cents under the December Chicago futures contract); the HRW Index was $4.75 (42 cents under the December KC contract); the Spring Wheat Index was $5.08 (63 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub