DTN Before The Bell Grains

Morning CME Globex Update:

Brazil's election over the weekend of a far-right presidential candidate is the big market mover at the start of the week, driving their currency and soybean prices higher and therefore allowing U.S. soybean prices to move higher, too, and take corn and wheat futures with them Monday morning.

Other Markets:

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

Corn:

Corn futures prices are up only a little at the start of the week, but they are positive, alongside the soybean market's gains and despite pressure from a stronger dollar. The weekly Commitments of Traders report from the CFTC confirmed that speculative investors have been liquidating their corn futures and options positions during all the upheaval in the global stock, bond, and currency markets. However, the liquidation mostly included short-covering, and the 'Managed Money' segment of the market is still net-long in corn. A Crop Progress report will be released Monday afternoon, likely showing the U.S. corn harvest has advanced by another 10 percentage points or so during last week's favorable weather. The weather forecast going forward included just enough rain showers to potentially delay some harvest progress, but that's more of a concern for the last bits of soybean harvest than for corn, which will stay standing into November without too many problems. The DTN National Corn Index was $3.27 per bushel Friday, showing national average basis steady at 41 cents under the December futures contract.

Soybeans:

Soybean futures gains are leading the grain and oilseed sector Monday morning after weekend developments in Brazil. It's not obvious why the election of a far-right president in Brazil, who has celebrated the use of torture against political opponents, would be bullish to U.S. soybean prices, but the market seems to think a Bolsonaro presidency will be positive for Brazilian business and industry, so the value of their currency, the real, has surged almost 2 1/2 percent overnight. A stronger real makes Brazilian soybeans more expensive on the global market, and although there aren't many physical beans left available for export anymore, and it will be four or five months before the 2019 crop of Brazilian soybeans arrives at the ports, this price scenario allows U.S. soybean prices to move higher in dollar terms, too. Chicago soybean futures are up 4 cents Monday morning. Brazil's 2019 soybean crop is a little under halfway planted and proceeding at a fast pace amid favorable weather. In the U.S., the DTN National Soybean Index was $7.47 Friday, or 98 cents under the November futures contract, which demonstrates a trend of tightening basis bids now that the gut slot of soybean harvest has passed. At 8 a.m. USDA reported 120,000mt soybeans sold to unknown destinations for delivery in 2018-2019.

Wheat:Outside markets show that investors are still funneling their money into "safe" assets Monday morning, like the U.S. dollar, and that's a pattern that typically puts pressure on wheat prices. Speculative investors grew increasingly net-short in their wheat futures and options positions during the week leading up to October 23, and futures trading volume has been heavy in the sessions since then. U.S. wheat futures are 2 to 4 cents higher Monday morning, but with international wheat markets moving lower, the upward momentum may be difficult to sustain. Positive export news boosted U.S. wheat futures on Friday, with Egypt including a small chunk of U.S. soft wheat purchases in their recent tender. Prior to that activity, the front-month Chicago chart was slipping lower outside of its recent sideways consolidation range. It remains above $5.07 so far on Monday. DTN's collected SRW Index on Wednesday was $4.69 per bushel (still 36 cents under the December Chicago futures contract); the HRW Index was $4.65 (still 36 cents under the December KC futures contract); and the basis bids for spring wheat also remained steady, averaging 53 cents under the December Minneapolis contract and putting the Spring Wheat Index at $5.25 per bushel.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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