DTN Before The Bell Grains

Morning CME Globex Update:

Soybeans, and corn and wheat in their wake, started Friday morning prepared to continue their sharp gains from Thursday, but that intention was more clear when the U.S. dollar looked set to continue its losses. Bullish enthusiasm has waned as the morning wears on.

Other Markets:

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

Corn:

Corn prices are following along in the upward direction of soybeans, if not in quite the same exuberant spirit. Two-cent gains Friday morning put the December contract slightly more than 8 cents away from its October low, and 10 cents away from its October high. Averaging new crop futures prices through the month of October (which would be used for crop insurance Harvest Price Options, if the results were more favorable than the spring discovery prices, which they're definitely not), soybeans came to $8.60 and corn came to $3.68. That's a 2.34-to-1 price ratio compared to February's 2.56-to-1 price ratio, showing how fundamentally the relative prospects of these two crops have changed during the U.S.-China trade war. There has been discussion that farmers may increase corn acres in 2019, as they presently have the opportunity to book next year's seed and make fall fertilizer applications. However, a lot can change between now and next May, and this week there's some fresh optimism about that trade war coming to negotiation. The DTN National Corn Index was $3.28 per bushel Thursday, showing national average basis at 39 cents under the December futures contract. At 8 a.m. USDA reported 200,900mt of corn sold to Mexico for delivery in 2018-2019.

Soybeans:

Even any small hint there may someday be negotiation between the U.S. and China can send soybean prices bustling higher by double digits, as we saw Thursday and as we're still seeing Friday morning -- that's how desperate this market is to see an end to the trade war. While traders wait for details or confirmation, soybean futures may continue to see stability and keep off recent lows during the weeks leading up to the G20 Summit (leaders will meet on November 30). The January soybean contract still remains roughly twelve cents below its high from October 15, when there was maximum concern about the late U.S. harvest. There were 602 issues and stops of expiring November futures contracts. The DTN National Soybean Index was $7.79 per bushel Thursday, showing national average basis continuing to crank stronger, now at $1.03 under the January futures contract.

Wheat:

Bullishness has been noted in the spring wheat market late this week, and the December contract may close the week with light gains. Even basis bids cranked tighter for that class of wheat Thursday, and the December-to-March Minneapolis futures spread has fallen to 7 1/4 cents. However, if this is based on continued rumors of poor grain quality coming out of certain Russian exporting facilities, which might maybe therefore need temporary shutdowns, which might maybe therefore benefit export business for other countries, which might maybe therefore include the U.S., then it's a pretty uncertain market mover for coming sessions. The U.S. Dollar Index is lightly lower Friday morning. Its big drop on Thursday was a huge boost to grain and oilseed prices (arguably more so than any rumors). DTN's collected SRW Index on Thursday was $4.75 per bushel (33 cents under the December Chicago futures contract); the HRW Index was $4.66 (35 cents under the December KC futures contract); and the Spring Wheat Index was $5.29 per bushel (48 cents under the December Minneapolis futures contract). Don't forget to set your clock back an hour this weekend before Sunday's overnight trade resumes!

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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