DTN Before The Bell Grains

Morning CME Globex Update:

Soybean and corn futures have pulled well off last week's lows and soybeans, specifically, have recently seen strong futures trading volume to hedge physical export business. Most consumer commodity markets perked up at 7:30 a.m. CDT when bullish GDP numbers were confirmed. Any further drastic moves may be waiting until after Friday's upcoming quarterly Grain Stocks report is released.

Other Markets:

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

Corn:

Higher target interest rates from the Federal Reserve may have spooked the U.S. stock market this week, but positive GDP growth could reassure market bulls Thursday morning, and crude oil, corn, and other commodities have adopted a higher direction. Gains in corn are still small: only a penny or two. The December chart is roughly 20 cents above its contract low from last week. Second-quarter GDP growth in the U.S. was confirmed at an exuberant 4.2%. Also, the weekly export sales report was quite strong for corn, showing 1,712,800 metric tons (mt) of sales. The USDA's Hogs and Pigs report Thursday afternoon is expected to show the nationwide swine herd 3.4% larger than it was a year ago, which, along with the year-over-year growth seen in cattle on feed, is a bullish driver of feed grains demand. Traders will expect to see quarterly corn disappearance of 3.3 billion bushels (bb) in Friday's upcoming Grain Stocks report. The DTN National Corn Index, an average of cash bids across the country, remained flat Wednesday at $3.20 per bushel.

Soybeans:

November soybean futures prices tested either side of unchanged overnight, with continued hot temperatures for Brazil's planting season and rain disruptions for the U.S. harvest, giving traders a somewhat bullish story to follow. Despite the excitement of seeing a 24.7 million bushel (mb) sale of soybeans to Mexico announced Wednesday (presaged by active futures activity Tuesday) and the thoughts that this trading pattern would pass through to stronger basis bids, the reality is that the impact on country basis bids has been negligible this week. The average bid for soybeans is still a historically weak $1.03 under the November futures contract, putting the DTN National Soybean Index at $7.47 Wednesday. The weekly export sales report showed business only up to Sept. 20 at a bearish pace: 870,700 mt of soybean sales. Malaysian palm oil prices were sharply lower Thursday, dragging soybean oil futures lower, too, and offsetting the otherwise steady influence of soybean meal prices.

Wheat:

Updates to the U.S. Drought Monitor Thursday confirm that less of the southern United States is officially in drought, which is promising for a large winter wheat crop to be planted. Kansas City and Chicago wheat futures were lower overnight but perked up along with outside markets Thursday morning. Note that the portions of extreme and exceptional drought in Colorado and Kansas actually grew over the past week. Grain prices could shift throughout the day during active positioning ahead of Friday's upcoming quarterly Grain Stocks report. The weekly export sales report showed improvement in the weekly pace of wheat sales: 657,100 mt. Overnight freezing temperatures for the Canadian prairies will firm up wet ground and ultimately be helpful to the final portions of their challenging spring wheat harvest. DTN's collected SRW Index was $4.73 Wednesday, (average basis steady at 45 cents under the December Chicago futures contract); the HRW Index was $4.81 (steady at 40 cents under the December KC contract); and the Spring Wheat Index was $5.15 (steady 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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