DTN Before The Bell Grains

Morning CME Globex Update:

The bulk of Tuesday's grain trading activity will likely take place later during the session, after an almost comatose overnight performance. It's likely that speculative traders will approach the market sometime this week with a noticeable volume of pre-report positioning ahead of Thursday's upcoming WASDE report. Soybeans are currently lower despite the ongoing harvest delays.

Other Markets:

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

Corn:

Corn futures spent a very quiet overnight session locked inside a 2-cent trading range, and the nearby futures spread remains unmoved, showing 12 cents of carry between December and March 2019. That's a bearishly wide number, and it suggests that commercial grain traders are unshakably confident about receiving and storing large quantities of bushels once the rain-delayed Midwestern harvest resumes. In its last batch of supply and demand estimates, the USDA suggested the U.S. would produce 14.827 billion bushels of corn in 2018. This Thursday, October 11, another round of estimates will be released, and some traders are expecting the yield and production figures to grow even more bearish. We haven't yet seen any huge volume of pre-report positioning in the futures market, but maybe that will happen as the Tuesday session wears on. Watch for ethanol futures to continue their short-term higher trend when the president officially announces Tuesday afternoon that the EPA will allow year-round blending of E15. The DTN National Corn Index was $3.24 Monday afternoon, showing national average basis continuing stronger at 43 cents under the December futures contract.

Soybeans:

Muddy fields make for cruddy moods, and farmers in the Western Corn Belt would really, really like this two-week row crop harvest delay to be over. The forecast suggests there will be a brief window of sunshine later this week, followed by more rain over the weekend. Due to Monday's federal holiday, the official weekly Crop Progress numbers won't be out until Tuesday afternoon, showing on a statewide and nationwide aggregate level how badly the U.S. harvest has been delayed. For soybeans especially, the harvest delays are likely to also mean quality losses, but the futures market is no longer pricing in more risk premium for that concern. Instead, soybean futures are lower Tuesday morning. In the U.S. cash market for soybeans, the DTN National Soybean Index was still $7.66 per bushel Monday, and still $1.03 under the November futures contract, showing historically weak average basis bids.

Wheat:

Wheat futures prices are a few pennies higher across all the exchanges Tuesday morning. Overnight trading volumes were very light, but more activity was noted after 7:30 a.m. (Central time). The benchmark December Chicago contract, for instance, may be stuck in a consolidation zone between $5.05 and $5.30 per bushel, and it may be difficult for the wheat charts to shift much higher Tuesday while the row crops are lower and the U.S. Dollar Index is once again pursuing its three-week-long higher trend. DTN's collected SRW Index was $4.76 Monday (showing the average U.S. basis bid stronger at 38 cents under the December Chicago futures contract); the HRW Index was $4.79 (steady at 39 cents under the December KC futures contract); and the Spring Wheat Index was $5.30 per bushel (weaker at 59 cents under the December Minneapolis contract). At 8:00 a.m. USDA reported 120,000 mt of HRS sold to Bangladesh for delivery in 2018-2019.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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