DTN Before The Bell Grains

Grains Higher; Soybeans Trending Lower

Elaine Kub
By  Elaine Kub , Contributing Analyst
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

Wheat and corn have been displaying a reliable day-to-day negative correlation with the direction of the U.S. dollar, and because the dollar is down Thursday morning, grains are up. The weekly export sales report showed 582,500 metric tons of wheat, 394,400 metric tons of corn, and 395,800 metric tons of soybeans sold.

Other Markets:

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

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Corn:

A sudden overnight surge in the Euro is causing a steep slide in the U.S. Dollar Index on the first day of November, which is lightly bullish to grains and allows corn prices to move up about a penny. The December contract is still drifting above the $3.60 1/4 low from October 11. Basis bids continue to crank tighter now that the gut slot of harvest has passed and grain companies are finding they don't own as many bushels as they would like amid an environment of relatively low grain prices and farmers' willingness to store grain on-farm. As a nationwide average, the countryside basis bid tightened two cents Wednesday, to 38 cents under the December futures contract, putting the DTN National Corn Index a $3.25 per bushel. Wednesday's ethanol report showed there are still over 1 million barrels per day being produced, and Thursday's export sales report showed 394,400 metric tons of corn and 12,100 metric tons of sorghum sold during the week leading up to October 25.

Soybeans:

Whether soybean futures prices swing up 5 cents one day or down 4 cents the next, the January-to-March futures spread remains stubbornly wide above 13 cents, suggesting the bearish overall structure of this market remains firmly in place. There has been no positive change in the U.S.-China trade war, so there is still that 25 percent tariff on U.S. soybeans, and that keeps a bearish cloud over the market. Specifically, the weekly export sales report showed lots of previous sales switching from China to different customers, some exports-for-own-account moving into Canada, and only 395,800 metric tons of total weekly sales. January palm oil futures dipped below a previous support level overnight, and the U.S. soybean crush margin has been working its way lower through the month of October. The DTN National Soybean Index was $7.44 per bushel Wednesday, showing national average basis stronger at $1.07 under the January futures contract. There were 813 issues and stops for November soybean futures contracts.

Wheat:

Global wheat futures prices are higher Thursday morning, led by gains in UK feed wheat, and U.S. wheat contracts continue to display the day-to-day negative correlation with the direction of the dollar. The weekly update to the U.S. Drought Monitor showed the trend of improvement continuing in the High Plains region, with less area in extreme or exceptional drought, and that's a promising omen for a good start to the 2019 winter wheat crop. On the bullish side, however, the weekly wheat export sales figure was surprisingly strong: 582,500 metric tons. Stronger basis bids have been noted not just for the row crops, but also for all three classes of wheat. DTN's collected SRW Index on Tuesday was $4.69 per bushel (32 cents under the December Chicago futures contract); the HRW Index was $4.61 (33 cents under the December KC futures contract); and the Spring Wheat Index was $5.19 per bushel (50 cents under the December Minneapolis futures contract).

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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Elaine Kub