DTN Early Word Grains
Soy Complex Firmer, Grains Weaker Midweek
December corn was down 1/4, November soybeans were up 3, and December KC wheat was down 1.
CME Globex Recap:Global equities are sharply better overnight, following up a strong session in the U.S. Tuesday. Equity markets in the U.S. are likely to be volatile as we head into the midterm elections next week. Energies are firmer Wednesday morning, but crude oil remains below its 200-day moving average at $67.48. Grains are mixed as we await the final third of harvest which is likely to slow with cooler, wetter weather moving into the Corn Belt by the weekend.
OUTSIDE MARKETS:Previous closes on Tuesday showed the Dow Jones Industrial Average up 431.72 points at 24,874.64 and the S&P 500 up 41.38 points at 2,682.63, while the 10-year Treasury yield ended at 3.132%. Early Wednesday, DJIA futures are up 116.00 points. Asian markets were higher with Japan's Nikkei 225 up 463.17 points (2.16%) and China's Shanghai Composite was up 34.74 points (1.35%). European markets are higher with London's FTSE 100 up 102.82 points (1.46%), Germany's DAX up 154.62 points (1.37%), and France's CAC 40 up 105.67 points (2.12%). The euro was down $0.00090 at $1.13510 and the U.S. dollar index was down $0.0270 at $96.9800. September 30-year T-Bonds were down 18/32nds while December gold was down $7.30 at $1218.00 and December crude oil was up $0.43 at $66.61. Soybeans on China's Dalian Exchange closed down 0.11% and soymeal closed down 0.06%.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | CIF corn bids have been firmer this week as the futures market has drifted lower. The bid side of the market is up 1-2 cents. | 1) | European and Russian wheat futures markets were sharply lower Tuesday, preceding the drop in U.S. futures later Tuesday morning. |
| 2) | EU wheat exports have been slow of late, off 24% for the year. USDA is currently forecasting EU wheat exports at 23MMT, down just 290,000MT. | 2) | The USD Index hit an overnight high of 97.0630, the highest value since June 26, 2017. Weakness against the USD seems to be shared by the loonie, euro, pound and Swiss franc. |
| 3) | The latest GFS model runs have the Central/Eastern Corn Belt as well as the mid-south region turning wetter next week, delaying the final 30% of corn and soybean harvest. | 3) | The Bloomberg Commodity Index gapped lower Tuesday to hit the lowest value since September 19. |
CORNCorn futures are quietly lower Wednesday morning, adding to losses from the last three sessions. With Tuesday's and Wednesday's weakness, December corn has retreated back under its 100-day moving average with sights on the 50-day. Ethanol production is on tap later this morning, although traders shouldn't expect their savior to come in the form of an ethanol plant as production margins remain at multi-year lows. RBOB/Ethanol spreads have moved sharply weaker over the last few weeks as the energy complex has declined. Spot month RBOB is now a 52-cent premium to ethanol, well off the 70-80 cent values witnessed in early October. This will not help discretionary blending. It does not feel as though export demand has improved at all with the break in the futures, potentially adding another bearish catalyst later in the week. Private estimates for next week's WASDE report will start to be released after the close today and continuing into the weekend. As has been the case for most of this year, private estimates appear to be grouping in the direction of the last WASDE move, not wanting to move too far away from the government forecast.
SOYBEANS Soybeans are a bit firmer this morning, trading both sides in a 4-cent range overnight but moving higher as we head toward the biscuit break. The downtrend in soybeans remains pervasive, notching fresh lows for the move overnight and sitting at the lowest levels in six weeks. Understandably, the market has been focused on soybean exports and the lack of a Chinese presence while crush margins have been stellar. Yet, we wonder if the market is paying attention to the fact Argentine soybean production is forecast to rise by 20 million metric tons after a disastrous crop a year ago. Crush margins remain solid at $1.18-1.45/bushels through May, but once the world's largest soybean crusher comes back online in 2019, those margins aren't likely to stick around. If margins slow, and therefore U.S. crush slows, this soybean market does not have another demand pillar from which to hang its hat. Private estimates for 2018/19 soybean carryout are already approaching 1.0 billion bushels thanks to poor exports, so a soft crush sector will do nothing to support this market if that becomes the case next spring. There doesn't appear to be a shortage of oilseeds anywhere in North America as canola prices fell to C$488.00/MT Tuesday, contract lows and the lowest levels since September. It would appear confidence was never low about harvesting the remaining acres in Alberta and Saskatchewan.
WHEAT Wheat markets are easier overnight, still well inside Friday's ranges. Regardless of price movement, open interest has continued its march higher as KC O/I is now the highest since late January while Chicago O/I is the highest since June. With the rise in short speculative positions on the latest COT report, it would stand to reason many of these fresh positions are held by managed funds and quite possibly underwater. Deliverable stocks posted Tuesday saw SRW supplies decline by another 1.109mbu with total supplies down around 17.7mbu from a year ago. This comes despite the fact beginning stocks and production were almost identical from a year ago. Black Sea futures and European Union futures were sharply lower yesterday with the former seeing closes down 1.0-2.01% while Paris fell 0.40-0.80%. Russian wheat remains the cheapest source of wheat in the world and until it trades a premium to U.S. offers, the board should have a difficult time rallying too far. Traders will be anxiously looking forward to Thursday's export sales report for confirmation of the business conducted last week with a negative reaction very likely if the expected tonnage is not seen.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.26 | -$0.01 | -$0.40 | Dec | $0.005 |
| Soybeans: | $7.41 | -$0.05 | -$1.11 | Jan | $0.002 |
| SRW Wheat: | $4.72 | $0.03 | -$0.35 | Dec | $0.010 |
| HRW Wheat: | $4.66 | $0.02 | -$0.35 | Dec | $0.004 |
| HRS Wheat: | $5.26 | $0.01 | -$0.52 | Dec | $0.011 |
Tregg Cronin can be reached at tmcronin31@gmail.com
Tregg can be followed throughout the day on Twitter @5thWave_tcronin
(KR)
Copyright 2018 DTN/The Progressive Farmer. All rights reserved.