DTN Before The Bell Grains

Morning CME Globex Update:

Soybean and corn prices were already lower overnight, then some shockingly low weekly export numbers at 7:30 (Central) intensified the bearishness and dragged the November soybean contract down by double digits. The export sales figures were 293,600 metric tons of soybeans, 382,500 metric tons of corn, and 476,000 metric tons of wheat.

Other Markets:

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

Corn:

The weekly export sales report showed a shockingly low corn number: only 382,500 metric tons of sales, or less than half of even the most bearish pre-report estimates. Futures prices responded with 3-cent losses. The grain markets have been mostly immune to the day-to-day panics and gyrations of the stock market, but economic news can't be totally ignored, considering the strong long-term negative correlation between the U.S. dollar and dollar-denominated corn futures. Wednesday afternoon, outside markets interpreted the latest meeting minutes from the Federal Reserve as bearish to bonds. The market is increasingly confident that interest rates will continue to be hiked higher, which allows the dollar to resume its upward trend, and is bearish to grains and grain production operations for a whole host of reasons. Weekly ethanol production remains above 1 million barrels per day, although it slackened somewhat in the latest EIA report, which also showed a growing ethanol inventory. The DTN National Corn Index was $3.32 per bushel Wednesday, showing national average basis steady at 42 cents under the December futures contract.

Soybeans:

Recent volatility in palm oil prices may be exacerbating the pullback in soybean oil and soybean futures prices Thursday morning. A bearish weekly export sales report, showing only 293,600 metric tons of soybean sales, also intensified the selling pressure on soybean futures. Row crop harvest weather has improved and the forecast remains clear for the heart of the Corn Belt through next week. That removes one of the bullish influences that helped soybean prices rally 80 cents off their mid-September low. However, the market still needs to assess the damage that was done to soybean quality and overall supply during the long stretch of wet weather on mature beans. Harvest anecdotes are suggesting damaged beans and sprouting beans are widespread. The nationwide average soybean basis bid remained steady Wednesday (but still weak) at $1.01 under the November futures contract. Cash bids range from over $8 per bushel in Illinois, to under $7 per bushel in the far western fringes of the Corn Belt.

Wheat:

Wheat futures prices tried a light recovery of Wednesday's losses, but have since been pulled lower by the bearishness in the row crop futures markets. The European livestock industry continues to cope with relatively tight feed wheat supplies after their summer drought in 2018, and predictions of cheaper corn making its way into feed rations may have spooked the UK feed wheat market earlier this week. In the U.S., the weekly export sales report showed 476,000 metric tons of sales in the week leading up to October 11, which was in line with the wheat export market's recent pace and well within the range of expectations. DTN's collected wheat indexes showed stronger basis bids for winter wheat varieties Wednesday: the SRW Index was $4.79 per bushel (38 cents under the December Chicago futures contract); the HRW Index was $4.84 (37 cents under the December KC futures contract); and the Spring Wheat Index was $5.32 per bushel (steady at 57 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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