DTN Before The Bell Grains

Soybeans Higher in Active Trade

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

Morning CME Globex Update:

Outside markets are likely to be jittery this week as traders anticipate an interest-rate announcement from the Federal Open Markets Committee Wednesday afternoon. The U.S. dollar is lower so far Tuesday morning. Grain and oilseed futures, on the other hand, are sticking with small movements at the start of the session, although strong trading volume has been noted and could build into something bigger.

Other Markets:

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

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Corn:

Sixteen percent of U.S. corn fields were already harvested as of Sunday night's Crop Progress observations, and while that is ahead of the average pace, we might nevertheless wonder how much faster it could have been without the disruptive rain experienced across the Corn Belt in the last seven days. The forecast calls for drier weather in the northwestern Corn Belt this week, and harvested bushels sold off the combine will add futures-selling pressure on corn prices. Nationwide corn condition ratings magically improved last week, perhaps after some of the worst fields have been picked and no longer end up in the ratings. North Carolina went from 66% harvested to 76% harvested last week, showing that farmers have been able to get back to work and match their average pace despite flooding in low-lying areas. National average basis bids remain at 44 cents under the December futures contract, and the DTN National Corn Index was $3.17 per bushel Monday. In the outside markets, crude oil prices are still surging higher, and the FOMC starts meeting Tuesday about potentially announcing an interest-rate rise Wednesday afternoon. USDA reported 239,630 mt of corn sold to Mexico for delivery in the 2018-19 marketing year.

Soybeans:

Calling it a 'turnaround Tuesday' might seem like a facile explanation, but the gains noted in soybean futures early Tuesday morning serve to wipe out Monday's losses, putting the November chart even with last week's close. Notably active volumes of futures trading activity are underpinning this upward movement. (Perhaps we'll hear an export sales announcement later.) Soybean harvest is still progressing ahead of the average pace, with 14% out of U.S. fields as of Sunday night. Meanwhile in central Brazil, planting of the 2019 soybean crop got off to a quick start last week, but a hotter, drier forecast now is challenging that crop's prospects. However well they ultimately yield, those beans won't grow fast enough to meet China's needs. But the outlook remains grim for the tariff-stunted prices received by U.S. farmers. A team of Iowa State University professors have released an analysis showing that state alone is likely to lose $159 million to $579 million dollars (down 3% to 11%) off its gross soybean output due to the trade disruptions. The November soybean futures contract has lost more than $2.48 per bushel from the end of May to last week's low of $8.12 1/4. The DTN National Soybean Index was $7.38 Monday, a reflection of the steady-but-terrible national average basis at $1.03 under the November futures contract. The typical late September average country soybean basis bid in the past 18 years has been more like 54 cents under November futures.

Wheat:

U.S. wheat futures are lightly lower Tuesday morning, following the losses in U.S. corn futures rather than tagging along with Paris milling wheat and UK feed wheat futures, which are finding some support. The weekly Crop Progress report showed winter wheat planting progress at 2 percentage points ahead of the five-year average (28% complete vs. 26% complete), and although a fast planting pace isn't a guarantee of a large overall planted acreage, it certainly helps, and large winter wheat acres should be expected for 2019 given the poor profitability currently projected for soybeans and wheat. Kansas's winter wheat planting progress was already 21% complete compared to a previous five-year average of 16% complete after the third week of September. DTN's collected SRW Index was $4.82 Monday, (average basis at 45 cents under the December Chicago futures contract); the HRW Index was $4.88 (steady at 41 cents under the December KC contract); and the Spring Wheat Index was $5.22 (steady at 63 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