DTN Before The Bell Grains

Grains Regain Composure

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

Morning CME Globex Update:

Corn and wheat prices are much quieter Thursday morning than the double-digit rout seen Wednesday. Outside markets are also neutral, helping to maintain this relative calm. The weekly export sales report showed 774,200 metric tons of corn, 693,500 metric tons of soybeans, and 387,600 metric tons of wheat sales.

Other Markets:

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

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Corn:

The corn market is already starting to rethink the extent of its Wednesday losses, which of course were triggered when the monthly WASDE report showed a massively abundant 14.8 billion-bushel crop now being projected by the USDA. But note that the report also projected 15.1 billion bushels of total usage in the 2018/19 marketing year, and that USDA bumped up every major demand category, including exports! Thursday morning's export sales report was neutral but generally backed up this idea by showing 774,200 metric tons of weekly corn sales. Outside markets may also support U.S. commodity prices Thursday, with the U.S. Dollar Index pursuing a short-term downward trend. The East Coast still waits to see how much rain and damage Hurricane Florence will bring to standing crops, major livestock operations, and the infrastructure to transport goods. At 8 a.m. USDA reported 142,876 mt of corn sold to Costa Rica for delivery in 2018-2019.

Soybeans:

The total volume of soybean futures trade on Wednesday's "report day" was roughly twice as large as we've seen on a typical recent trading day, and prices moved upward, on the whole, even after some bearish adjustments to USDA's soybean yield projection. Perhaps all the speculative traders who wanted to pile on net-short futures positions had already done so, and now they judge the chances for further bearish news have passed, or they simply feel that buying soybean futures below $8.50 is a historic bargain opportunity. In any case, soybean futures prices are steady and moving sideways Thursday morning. This is not to say the broader soybean market may not still express more bearishness as harvest gets rolling. Basis bids could, of course, weaken further when elevators fill with beans that have few willing, real, physical buyers at a time of year when soybean movement is typically hottest. This week's export sales report showed a lackluster 693,500 metric tons of soybean sales. National average basis was $1.00 under the November futures contract Wednesday, putting the DTN National Soybean Index at $7.40 per bushel. There is still no bid for soybeans at the PNW and subsequently, no soybean movement by rail out of the western Corn Belt, where basis bids are $1.50 to $1.90 under futures. At 8 a.m. USDA reported 108,010 mt of soybeans sold to Mexico for delivery in 2018-2019. 120,000 mt were also sold to unknown destinations; 40,000 mt for 2018-2019 delivery and 80,000 for 2019-2020.

Wheat:

This week's export sales report showed only 387,600 metric tons of wheat sales, and Chicago and KC wheat futures are still sinking Thursday morning, following up on the bearishness of Wednesday, when USDA bumped up the projection for Russian wheat production and for world wheat ending stocks. Note, however, that Russian spring wheat harvest isn't complete yet, and neither is Canada's, so the spring wheat market could still be called a weather market. Rain continues to plague pockets of the Canadian prairies, which won't help their harvest progress. Minneapolis futures limped along Thursday morning, mostly posting small gains. DTN's collected SRW Index was $4.62 Wednesday, (average basis at 45 cents under the December Chicago futures contract); the HRW Index was $4.65 (steady at 42 cents under the December KC contract); and the Spring Wheat Index was $5.03 (stronger at 62 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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Elaine Kub