DTN Before The Bell Grains

Grain Trades Tentatively Monday Morning

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

Morning CME Globex Update:

Corn and soybean futures have followed the direction of crude oil at the start of the week, which was lower overnight but has started posting small gains as traders arrive at their desks and contemplate how much risk they're willing to take on ahead of this week's mid-term elections. Global wheat futures are steady or lower.

Other Markets:

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

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Corn:

Trading interest for energy futures Monday morning has changed the mood of the commodity markets and allowed corn prices to tiptoe two cents upward. Other outside markets may take a wait-and-see approach until the midterm elections are over. Otherwise, the corn market itself over the past month has shown a willingness to stay away from any fresh harvest lows. Traders will be expecting to see the U.S. corn harvest round the bend past its 3/4 mark in Monday afternoon's Crop Progress report. Whatever market pressure there may have been from physical bushels being brought to elevators and sold for cash at harvest now seems to have waned, and commercial grain companies, if anything, are having to re-assess their strategies to get ownership of the volume of bushels they would like. The DTN National Corn Index was $3.34 per bushel Friday, showing national average basis stronger at 38 cents under the December futures contract. At 8:00 a.m. USDA reported 101,745 metric tons of corn sold to Mexico for delivery in 2018-2019.

Soybeans:

The nearby January-to-March soybean futures spread has dipped tighter in recent sessions, showing that commercial traders feel legitimate concern about the last, late portions of soybean harvest amid damp, unsettled weather. The spread traded at 12 cents Monday morning, which is still bearish in historical terms, but is pulling back from its previous width. Rain is good for the early development of planted soybeans in Brazil and Argentina at this time of year, but it's very unwelcome in certain portions of the Midwest, where it affects the quality of mature soybeans still standing in wet fields. Soybean harvest in Kansas, for instance, was less than halfway complete and 28 percentage points behind its average pace in last week's Crop Progress report and will likely still be behind in Monday afternoon's report, after rain has kept accumulating over the past several days. Other states likely to still be significantly behind on their soybean harvesting progress include Wisconsin, Iowa, Missouri, Arkansas, Nebraska, South Dakota, and North Dakota. There were 370 issues and stops of expiring November futures contracts. The DTN National Soybean Index was $7.85 per bushel Friday, showing national average basis steady at $1.03 under the January futures contract.

Wheat:

Speculative 'managed money' traders spent the last part of October accumulating fresh bearish futures and options contracts in the wheat market, adding to their heavily net-short strategy. Wheat's downward trend of the past few months has encouraged that strategy, with the front-month Chicago wheat chart now more than $1 per bushel off its high from August 2. The Minneapolis spring wheat market is displaying relatively more strength than the winter wheat markets Monday morning, although trading volume so far has been extremely light. Fundamentally, a little more bearishness is justified for the winter wheat markets, which have seen eager planting intentions this fall and, where that planting was possible ahead of the rain, favorable moisture to start the crop. DTN's collected SRW Index on Friday was $4.76 per bushel (33 cents under the December Chicago futures contract); the HRW Index was $4.71 (33 cents under the December KC futures contract); and the Spring Wheat Index was $5.33 per bushel (47 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