DTN Before The Bell Grains

Grain, Oilseed Markets Steady

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

Morning CME Globex Update:

A stronger U.S. dollar Wednesday morning may be keeping a lid on corn and wheat futures. These markets, and soybeans, have been relatively stable so far this week, continuing to pull off last week's lows and stay inside established trading ranges.

Other Markets:

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

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Corn:

The corn futures market was quiet overnight but could develop volatility alongside the outside markets during Wednesday's session. U.S. stocks have paused their recent rally while they await a Wednesday afternoon interest rate announcement from the Federal Reserve. The expectation is for the target rate to be boosted toward 2% to 2.25%, and while that expectation seems to be priced into the dollar and the stock markets already, higher interest rates do, of course, challenge borrowers. Farmers' financing costs would correspondingly increase, and eventually, land prices would lose their shine in high-interest-rate environments. Otherwise, the fundamental outlook for the corn market is stable. The December futures contract has pulled over 20 cents off last week's contract low, and the December-to-March futures spread at 12 cents still shows an industry prepared to store and ship the newly-harvested grain. National average basis bids remain at 44 cents under the December futures contract, and the DTN National Corn Index was $3.20 per bushel Tuesday.

Soybeans:

With the exception of some showers in the southeastern United States Wednesday, it should be a nice sunny day for soybean harvest wherever the ground is firm enough to drive. There is some frost forecast for the Northern Plains this weekend, but it's unlikely to harm soybean production numbers at this stage in the season. Many years, we would expect to see pressure on the futures market from farmers selling soybeans off the combine, but not this year; not at these prices. Instead, global soybean prices may be responding to weather concerns in central Brazil, where a forecast for hot weather (above 100 F) will challenge their early soybean planting season. In the U.S. cash market, the DTN National Soybean Index was $7.43 Tuesday, a reflection of the weak national average basis still at $1.03 under the November futures contract. The typical late September average country soybean basis bid over the past 18 years has been more like 54 cents under November futures. The UUSDA reported export sales of 671,934 metric tons of soybeans to Mexico for delivery in the 2018-19 marketing year.

Wheat:

Wheat prices were mixed Wednesday morning, and the benchmark December Chicago wheat contract has pursued a net sideways direction so far this week. For Friday's upcoming quarterly Grain Stocks report, the average trader estimates show 2.343 billion bushels (bb) of wheat competing for storage space against 2.010 bb of corn and, crucially, 401 million bushels (mb) of soybeans leftover on Sept. 1, which haven't been moving toward export terminals in their typical seasonal pattern. Nearby futures spreads for hard wheat varieties have been growing lately, making wheat an attractive crop to store (more cents per bushel per month than corn; less shrink and fewer logistics problems than soybeans). DTN's collected SRW Index was $4.76 Tuesday, (average basis steady at 45 cents under the December Chicago futures contract); the HRW Index was $4.82 (stronger at 40 cents under the December KC contract); and the Spring Wheat Index was $5.19 (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