DTN Before The Bell Grains

Morning CME Globex Update:

Wednesday night was the October "Hunter's Moon," presumably good for late-night hunters (and corn harvesters). Bargain-hunters will find multiple opportunities in the consumer markets this week. Weekly export sales came to 349,500 metric tons of corn, 212,700 metric tons of soybeans, and 442,600 metric tons of wheat.

Other Markets:

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

Corn:

The weekly export sales report showed 349,500 metric tons of corn sales, an underwhelming weekly amount in an export market that is otherwise in strong shape, longer-term. There were also sales of 55,000 metric tons of sorghum reported. The direction of corn futures trade Thursday morning is pointed downward. Rain is likely to temporarily disrupt row crop harvest again in the heart of the Midwest during the last half of this week. Certain portions of the western Corn Belt had not yet caught up to their average pace of harvest progress, and the disruption will be particularly unwelcome to those farmers, but it's not likely to be a market mover. The structure of the corn market continues to be totally unfazed by outside market volatility, and the December-to-March futures spread remains wide but stable at 12 cents per bushel. The DTN National Corn Index was $3.27 per bushel Wednesday, showing national average basis steady at 41 cents under the December futures contract.

Soybeans:

Unlike the grains, the soybean futures market has received very high volumes of trading interest during the past two days of outside market volatility, although the net result has been mostly neutral. The November contract has shed a little more than 7 cents so far this week. Presumably, the heavy trading volume has come from speculative funds either spooked or needing liquidation during the stock market meltdown. Managed money has been net short in soybean futures, but not by a large margin, so if continued liquidation occurs, it may be balanced between both sellers and buyers trying to get out of previous positions. The second round of the Brazilian presidential election will take place Sunday, October 28, but so far, the country's currency and stock market have remained on sideways paths this week. The U.S.-China trade war is still going on with no end in sight, and the weekly export sales report demonstrated that trade bearishness in stark numbers: net soybean sales of only 212,700 metric tons were reported. The nationwide average soybean basis bid strengthened into double digits, finally! The gut slot of 2018 soybean harvest pressure is likely past. The DTN National Soybean Index was $7.51 per bushel Wednesday, or 99 cents under the November futures contract.

Wheat:

While U.S. wheat traders are actively jockeying with Russian wheat traders to win export business, the day-to-day movement of U.S. wheat futures prices will be highly sensitive to shifts in the U.S. dollar. That was true Wednesday during the Dollar Index's surge (winter wheat futures tumbled by double digits), and it will likely continue to be true throughout this week. The weekly export sales report showed an unsurprising 442,600 metric tons of wheat sales. Wheat futures prices are lightly lower at the start of Thursday's trade. Treasury futures continue to recover off their early October low, suggesting the peak interest rate panic is behind us, and the volatility we're now seeing in global stock markets is related to more widespread concerns about an actual economic slowdown. DTN's collected SRW Index on Wednesday was $4.62 per bushel (38 cents under the December Chicago futures contract); the HRW Index was $4.61 (36 cents under the December KC futures contract); and the Spring Wheat Index was $5.24 per bushel (weaker basis at 55 cents under the December Minneapolis contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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