DTN Early Word Grains
Mixed Trade to Finish Off Higher Weekly Closes
December corn was up 1 1/2 cents, November soybeans were down 6 1/4 cents, and December K.C. wheat was down 1/4 cent.
CME Globex Recap:Global equity markets are stronger to close the week as both the U.S. and China seem much more reserved with the latest round of tariffs tacked on. The weakness in the U.S. dollar index is supporting commodities across the board with the Bloomberg Commodity Index trading to the highest level since mid-August Thursday. A little back and fill trade in the grain room Friday.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Previous closes on Thursday showed the Dow Jones Industrial Average up 251.22 points at 26,656.98 and the S&P 500 up 22.80 points at 2,930.75 while the 10-year Treasury yield ended at 3.068%. Early Friday, DJIA futures were up 1.50. Asian markets are higher with Japan's Nikkei 225 up 195.00 points (0.82%) and China's Shanghai Composite up 68.24 (2.50%). European markets are higher with London's FTSE 100 up 77.50 points (1.05%), Germany's DAX up 83.05 points (0.67%), and France's CAC 40 up 36.58 points (0.67%). The euro was down 0.00050 at 1.18490 and the U.S. dollar index was up 0.1040 at 94.0020. September 30-year T-Bonds were unchanged while December gold was down $0.40 at $1210.90 and October crude oil was up $0.44 at $70.76 Soybeans on China's Dalian Exchange closed down 0.11% while meal was up 0.57%.
| BULL | BEAR | ||
| 1) | 2018/19 corn export commitments are running 50% ahead of this same time last year versus USDA calling for a 1% decline. | 1) | Soybean export commitments have finally slipped below year-ago levels, posting a 7% deficit versus the same week a year ago. |
| 2) | The U.S. dollar traded to the lowest level since July 9 on Thursday and is now below both the 50-day and 100-day moving averages. | 2) | Funds continue to maintain a net long position in Kansas City wheat versus net-short positions in both corn and soybeans, limiting gains on spread unwind. |
| 3) | Black Sea Wheat futures have rallied $9/metric tons (MT) this week to trade at the highest level since Aug. 20. | 3) | CIF soybean bids at the Gulf were weaker Thursday with the board gains, giving back some of the CIF bump acquired on Wednesday. |
CORN December corn is firmer Friday morning, adding to Thursday's sharp gains but remaining well inside the previous day's range. Corn owed much of its strength to soybeans, which were rallying on a host of rumors working through the trade with very few specifics. However, export sales is continuing to run better than the level needed, which is keeping cash markets firm even with the entire harvest left to bring in. Export sales this week totaled 54.5 million bushels (mb) versus the 34.7 mb needed weekly to hit the USDA forecast. Total commitments are now 651.7 mb versus 434.2 mb on this same date a year ago. The USDA is calling for exports to fall 1% year over year, which looks misguided based on how strong of a start we are off to. Argentine corn is actually cheaper than U.S. corn on a FOB basis by $2 to $3/MT in October/November/December, but offerings from them should be limited moving forward. Brazilian corn is running $11 to $12/MT more expensive than the U.S. on a FOB basis. Lots of chatter Friday in the trade about whether the fall lows have been made. Looking back, December corn hit its calendar year lows in September twice since 1990, once in 1998 and in 2009. In 1998, December corn rallied 17.8% from its contract low to the fall high. In 2009, the Dec corn contract rallied 36%. Without trying to project a bottom, once seasonal lows have been made, it would not be extraordinary to see corn tack back on some premium. Corn remains in its declining trend channel dating back to the July highs. Trade above 3.60 basis CZ would move us out of the downtrend channel.
SOYBEANS November soybeans are lower Friday morning, battling the hangover of 16-cent gains on Wednesday and 20-cent grains on Thursday. The catalyst for the rally seems centered on rumors related to Argentina and China. For starters, trade chatter suggested Argentina may have bought up to 10 cargoes of U.S. soybeans for the purpose of back-to-backing the sales to avoid the tariff and get China beans until the South American new crop comes in. While 10 cargoes would be worth raising an eyebrow over, one must keep 300,000 MT in context. This time of year, China is usually buying a couple million metric tons a week. Add in the rumor that China is actually trying to quietly cancel some U.S. soybean cargoes out of the Gulf, and it isn't difficult to see why CIF beans leaked lower Thursday after gains Wednesday. Another rumor posited was that China was planning to cut some import duties on goods from various countries. The United States and soybeans are not expected to be on that list, although more anecdotal reports suggest China may be closer than we think to needing a deal to get done. Export sales were a bit sluggish this week at 33.7 mb versus the 28.8 mb needed weekly to hit the USDA forecast. Total commitments of 658.9 mb are finally below last year's same week sales of 710.3 mb. November soybeans have set their calendar-year lows in September three times: 2006, 2014 and 2015. The performance of those years once the lows were put in included rallies of 26% ('06), 20% ('14) and 7% ('15). In 2015, after lows were set and the rally completed, price fell all the way back to the contract lows by the time expiration rolled around. Heavy rainfall around the Corn Belt this week with many locations recording 2- inch to 8-inch amounts. Harvest should be very slow going the rest of this week and into next week. A harvest that doesn't all occur in one week would be good news for grain handlers as the system is likely going to have its hands full trying to store more soybeans than ever before yet still keep their facility liquid.
WHEAT Wheat markets are slightly lower Friday morning, lagging row crops just as they did during Thursday's session. Like most CBOT Ag futures, technicals are turning up for many contracts, wheat included. Plenty of weather issues to stay abreast of including the ongoing drought/frost conditions in Australia, harvest delays in Canada and Russia/Kazakhstan due to cool, wet weather and dryness in Argentina. Exports continue to bumble along, giving zero hints of improved demand in coming weeks. On the export sales report, total commitments of all-wheat were listed at 10.207 million MT, the lowest level since 2006, and the second lowest going back to 1990. Commitments as a percent of the USDA forecast are even worse at 36.59%, the smallest on record going back to 1990. In fact, there are only three years where commitments as a percent of USDA's forecast were below 40% for this week on the calendar. Weekly sales were 17.2 mb versus the 17.6 mb needed weekly. Total commitments are down 22% from a year ago versus USDA's forecast calling for a 12% to 13% decline year over year. Spot floor values have been improving this week, calendar spreads continue to trend higher and techs look as though seasonal lows may have been put in. If soybeans and corn are going to continue to lead the rally, wheat will likely suffer on a relative basis given how many long wheat/short bean spreads there are. As we've been preaching for weeks, any sustainable rally needs to be led by Black Sea and European values. The U.S. needs to remain competitive and not rally away from the business. Winter wheat boards would do well to take out the Sept. 11 and Aug. 31 highs to flip intermediate term trends higher.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.09 | $0.07 | -$0.44 | Dec | $0.004 |
| Soybeans: | $7.47 | $0.20 | -$1.03 | Nov | -$0.005 |
| SRW Wheat: | $4.78 | $0.02 | -$0.46 | Dec | $0.009 |
| HRW Wheat: | $4.86 | $0.01 | -$0.41 | Dec | $0.003 |
| HRS Wheat: | $5.25 | $0.00 | -$0.63 | Dec | -$0.009 |
(BAS)
Copyright 2018 DTN/The Progressive Farmer. All rights reserved.