DTN Before The Bell Grains

Grain Prices Moderate Alongside Outside Markets

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

Morning CME Globex Update:

Grain and oilseed futures prices were mixed Monday morning, alongside a relatively quiet start in most outside markets. Corn, soybeans, and wheat will all be vulnerable to sudden movements through the week, but will likely hold off on any major volatility until the monthly supply and demand report is released Wednesday morning.

Other Markets:

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

Corn:

Corn futures prices seem stuck on a sideways path just under $3.70 per bushel, with no fresh news to spark things in a new direction so far Monday. Vast portions of the Corn Belt will want to get dried up, and soon, with 2018 harvest approaching faster than usual but recent rains are making everything muddier and more challenging. Palmer Drought Index readings show soggy soil from northeast Nebraska across Iowa and into Wisconsin. Over the weekend, the leftover Gordon storm system blasted portions of Illinois and Indiana with rain totals up to 3 inches, and continued to disrupt row crop harvest in the Delta states. Hurricane Florence is now threatening the East Coast, where corn production is less influential to the nationwide market, but commodity market volatility may be noted if energy and transportation infrastructure are damaged. Most of the volatility in grain prices this week, however, is expected to come from USDA's monthly batch of World Agricultural Supply and Demand Estimates, which will be released Wednesday morning. The DTN National Corn Index, an average of cash bids around the country, was $3.24 per bushel Friday, with nearby cash corn bids growing stronger, on average, to 43 cents under the December futures contract.

Soybeans:

Soybean traders are expecting to see even larger U.S. crop estimates from the USDA on Wednesday, with average guesses at 52.2 bushels per acre and 4.649 billion bushels of production, which may keep a lid on any upward momentum in soybean futures prices Monday morning. Malaysian palm oil prices and Canadian canola prices are relaxing Monday after last week's gains, and the Brazilian real is similarly pulling up off its recent low, so most of the outside markets which affect U.S. soybean price competitiveness are neutral at the start of this week. One exception is the soybean futures market in Dalian, China, where prices popped suddenly after weekend frost in northeast China, but the chart has since moderated itself. Similar streaky upward movement could get triggered at any time in U.S. soybean futures, with the Managed Money segment of the market recently accumulating even more short speculative positions. They now hold 1.9 times as many short futures contracts as long futures contracts. The DTN National Soybean Index was $7.46 Friday, with the national average basis bid steady at a terribly weak 98 cents under the November futures contract. At 8 a.m. USDA reported 132,000 mt of soybeans sold to unknown destinations for delivery in 2018-2019.

Wheat:

Wheat futures prices are lightly higher Monday morning ahead of the afternoon's weekly Crop Progress report, which may remind the market of this fall's large winter wheat seeding prospects if farmers can get into the fields early and anticipate better profitability in 2019 than from soybeans, for instance. Speculative wheat futures traders spent the last few days of August and the first few days of September dumping long wheat futures positions and switching to more bearishly short positions, although this segment of the market is still heavily net long in all three U.S. wheat markets. With heavy domestic inventories and relatively disappointing U.S. export business so far, the potential for continued selling pressure may keep the wheat charts headed on a short-term downward trend. DTN's collected SRW Index was $4.65 Friday, (average basis at 46 cents under the December Chicago futures contract); the HRW Index was $4.72 (steady at 42 cents under the December KC contract); and the Spring Wheat Index was $5.07 (steady at 63 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

Elaine Kub