Morning CME Globex Update:
The majority of this week's volatility in grain and oilseed futures trade seems to be behind us, and the markets are maintaining a quiet tone Friday morning. The general direction is an upward rebound, led by wheat, and keeping the row crops off their fresh contract lows. Friday is last trading day for September futures.
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After Hurricane Florence made landfall in North Carolina Friday morning, and as additional tropical storms swirl in both the Atlantic and Pacific oceans, crude oil prices are higher and are leading a generally upward direction for commodity futures, including corn futures. A few unlucky pockets of the Corn Belt may get rained on this weekend, but otherwise, warm, sunny skies should shine on a busy harvest weekend. So far, corn basis bids have held up at seasonally-normal levels, with the national average nearby corn bid at 44 cents under the December futures contract Thursday, or $3.07 as a flat price. The weather may turn cooler in the 6-10 day forecast for the Northern Plains, but no severe frost threat is anticipated yet, and crop maturity has advanced so quickly in 2018 that this threat has limited power anyway. Friday is the last trading day for September grain and oilseed futures contracts. If the December corn contract can maintain its light gains through Friday's trading session, it should take over the continuous front-month chart above $3.50 Monday.
Soybean futures are a few cents higher Friday morning, but still lingering within 25 cents of the fresh contract lows that were hit earlier in the week. Nothing has officially changed yet in the contentious U.S.-China trade relationship or the mutually-punishing program of tariffs, including the 25 percent tariff on U.S. soybeans. But there have been rumors this week that perhaps the two countries might be willing to discuss setting a time to talk about maybe one day negotiating something. Or not, if decision-makers suddenly change their minds. In any case, the rumor alone has been enough to spark some optimism in China-related stock prices, and may also be helping keep the soybean futures market stable. Physically, soybeans in the western Corn Belt still have nowhere to go, and basis bids are still terrible and getting worse day by day. National average basis weakened to $1.01 under the November futures contract Thursday, putting the DTN National Soybean Index at $7.32 per bushel.
Wheat futures are leading the Friday grain rebound, with the December KC contract up 8 cents and milling wheat futures in Europe also up 1 Euro per metric ton. Numbers from the Saskatchewan crop report released Thursday suggest Canada's spring wheat harvest will surpass the halfway mark this weekend. Seventy-three percent of Saskatchewan's durum wheat was harvested as of September 10, and the quality is promising: 60 percent of the durum is estimated to grade 1CW. Halfway across the globe, eastern Australia's winter wheat crop is pretty much toast, but Western Australia is anticipating better-than-average yields when harvest ramps up next month. Quality will be questionable, and with lingering questions about Russia's wheat quality and availability this year, there may be opportunities for U.S. wheat export prospects to improve during the 2018/19 marketing year. DTN's collected SRW Index was $4.52 Thursday, (average basis steady at 45 cents under the December Chicago futures contract); the HRW Index was $4.60 (steady at 42 cents under the December KC contract); and the Spring Wheat Index was $4.99 (weaker at 63 cents under the December Minneapolis contract).
Elaine Kub can be reached at email@example.com
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