Morning CME Globex Update:
Grains and oilseed futures posted mostly higher prices overnight, free to express some fundamental risk premium without disruption from outside market factors. Interest rates and the stock market have calmed since the peak panic earlier this week. The export sales report showed just over one million metric tons of corn sales, 439,700 metric tons of soybean sales, and 339,000 metric tons of wheat sales in the week leading up to October 4.
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The corn market saw a respectably bullish weekly export sales report Friday morning, with just over one million metric tons of sales. That follows Thursday's monthly World Agricultural Supply and Demand Estimates, which showed a somewhat bearish adjustment for corn, raising the 2018-19 U.S. ending stocks projection to 1.813 billion bushels. But even that wasn't at all as bearish as many traders expected to see, and futures prices were boosted Thursday and continued mostly higher overnight. The December contract briefly traded over $3.70 per bushel, higher than it's been since August. Note that from a demand perspective, the USDA left its ethanol usage projection unchanged, bumped up the export number by 50 million bushels, and dropped feed usage by 25 million bushels. The DTN National Corn Index was $3.26 Thursday afternoon, showing national average basis steady at 43 cents under the December futures contract.
Flood gauges are still registering in Illinois, Iowa, Missouri, and Kansas (and the Carolinas), and soybean fields are still under snow in North Dakota and the portions of eastern South Dakota that aren't also seeing localized flooding. Typically, a futures market won't react just because a crop's harvest progress is a little late, but for Midwestern soybeans in 2018, the lateness and the wetness has now led to widespread crop losses as the soybean pods open up and some of the soybeans themselves begin to sprout. It isn't every field, and losses may be relatively minor in the fields where it is happening (5 percent or so), but it will likely ding the ultimate nationwide yield. We may not see the full 4.69 billion bushels of soybean production that USDA projected in Thursday's WASDE report. Futures prices are roughly 5 cents higher Friday morning, and the November-to-March futures spread is tightening slightly to 26 1/2 cents. As far as cash bids go, the nationwide average basis is still historically weak at $1.02 under the November futures contract, putting the DTN National Soybean Index at $7.56 per bushel. Friday is the last trading day for October soybean meal and soybean oil futures contracts.
Wheat's global supply-and-demand outlook received bullish tweaks in Thursday's report, with Russia's wheat production lowered by 1 million metric tons and the projection for Australia's wheat crop lowered by 1 1/2 million metric tons. Chicago wheat futures are higher Friday morning alongside the light gains made by the row crops, but are still in a stubbornly sideways trend. Wet conditions have slowed winter wheat planting progress in the Southern Plains, and more rain is forecast over the weekend, with Tropical Storm Sergio slinging more wetness toward Texas and Oklahoma (unfavorable for cotton and sorghum harvest, among other things). The weekly export sales report was pretty dismal for wheat, showing only 339,000 metric tons of sales. Wheat basis bids remained steady Thursday for all three classes of wheat: DTN's collected SRW Index was $4.70 (38 cents under the December Chicago futures contract), the HRW Index was $4.76 (38 cents under the December KC futures contract), and the Spring Wheat Index was $5.32 per bushel (58 cents under the December Minneapolis contract).
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