DTN Before The Bell Grains

Morning CME Globex Update:

So far Wednesday morning, crude oil is staying off the fresh four-year high it established during Tuesday's trade, and the U.S. dollar and U.S. stock markets are similarly quiet. Wheat's rumor-driven Tuesday surge is being followed by more sedate gains in the Minneapolis spring wheat market Wednesday morning. Corn and soybeans have built modestly higher short-term trends amid wet weather and harvest delays.

Other Markets:

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

Corn:

A short-term higher trend seems to be building in the corn market, and the December futures contract came within a penny of taking out its September high in overnight trade. The average cash bid being made to farmers Tuesday for corn off the combine was $3.24 per bushel, almost 20 cents stronger than we saw at this time last year. Basis bids, also, at an average of 43 cents under the December futures contract, are slightly stronger than this time last year. The weather forecast continues to predict more cold and wet weather later this week, and even heavy rain and localized flooding during the Columbus Day weekend for central areas of the Corn Belt. For now, the wet weather and harvest delays are an annoyance to farmers. But eventually, the wetness could translate into quality concerns that would shift local supply outlooks. The December-to-March futures spread remains bearishly wide at 12 cents Wednesday morning, so there is clearly no overall shift in the supply outlook, yet. The market is still anticipating a 14.8-billion bushel (bb) corn crop. The USDA reported export sales of 230,000 metric tons of corn for delivery to Japan during the 2018-19 marketing year.

Soybeans:

Soybean futures are 3 cents to 4 cents higher in light trade early on Wednesday and have climbed more than 57 cents since their Sept. 18 low. Widely scattered thundershowers in Mato Grosso, Mato Grosso do Sul and Parana Wednesday are a boon to Brazil's row crop planting intentions, which were already making relatively fast progress compared to recent years. Brazil will hold a presidential election on Sunday, Oct. 7 (first-round), and after the far-right candidate did well in recent polling, the country's currency has surged 4% in the past two trading sessions. The Bovespa stock index is also up almost 4% since Monday's close. In theory, higher FOB prices for 2019 soybeans at Brazil's ports, in real currency terms, allow U.S. soybean prices to move higher, as well. There's a lot of slack and other intermediating influences in that relationship, of course, to say nothing of the five months of South American weather that must pass before the soybeans are harvested. In the present-day U.S. cash market for soybeans, the DTN National Soybean Index was $7.61 per bushel, or $1.05 under the November futures contract, showing historically weak average basis bids.

Wheat:

Whenever there has been volatility in wheat futures prices during the past two months, it seems like some Russian rumor is behind it, and that was the case again this week, as chatter passed through the market about Russia's export facilities potentially, maybe having to shut down for up to 90 days. This rumor still hasn't been verified. Minneapolis spring wheat futures were already holding steady amid concerns about the late, wet Canadian harvest, and then Tuesday's rumor was good for 14 1/4-cent gains, followed by gains of up to 7 1/4 cents overnight. Most wheat futures trade has quieted down since then, but gains equivalent to 6 cents to 11 cents per bushel are still being noted in European wheat futures contracts. Other outside markets have also calmed down after big pushes at the start of the week, like crude oil, which is so far Wednesday morning staying off the high of $75.91 per barrel posted on the December WTI chart Tuesday. DTN's collected SRW Index was $4.80 Tuesday (showing the average U.S. basis bid at 39 cents under the December Chicago futures contract); the HRW Index was $4.84 (39 cents under the December KC futures contract); and the Spring Wheat Index was $5.34 per bushel (57 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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