DTN Early Word Grains
Mixed Grain Markets in Quiet Overnight Trade
December corn was up 1/4 cent, November soybeans were up 2 cents, and December KC wheat was down 1/4 cent.
CME Globex Recap:Financial markets are mixed with the energy complex trying to stabilize after the worst drawdown since the 2009 financial crisis. The U.S. Dollar Index is firmer but off highs posted Monday. Grain markets are quietly mixed with most contracts posting sideways to lower short-term price direction. The closer we get to Thanksgiving, the closer we are to the holiday doldrums.
OUTSIDE MARKETS:Previous closes on Tuesday showed the Dow Jones Industrial Average down 100.69 points at 25,286.49 and the S&P 500 down 4.04 points at 2,722.18, while the 10-year Treasury yield ended at 3.147%. Early Wednesday, DJIA futures are down 26.00 points. Asian markets were mixed with Japan's Nikkei 225 up 35.96 points (0.16%) and China's Shanghai Composite down 22.64 points (-0.85%). European markets are lower with London's FTSE 100 down 32.75 points (-0.46%), Germany's DAX down 69.94 points (-0.61%), and France's CAC 40 down 36.09 points (-0.71%). The euro was up $0.00140 at $1.12875 and the U.S. Dollar Index was up 0.3450 at 97.3020. September 30-year T-Bonds were up 4/32nds, December gold down $2.40 at $1199.00 and December crude oil up $0.21 at $55.90. Soybeans on China's Dalian Exchange closed down 0.46% and soymeal closed down 0.96%.
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| BULL | BEAR | ||
| 1) | Winter wheat planting progress was estimated at 89% complete vs. expectations for 90% and 94% average. | 1) | December Chicago wheat futures posted a double top Tuesday, giving back three quarters of Monday's rally. |
| 2) | Soybean export inspections hit the needed level for the fifth week in a row at 47.8 million bushels vs. 35.0mbu required to achieve USDA's forecast. | 2) | Crude oil continued its disastrous decline Tuesday, dropping $4.24/barrel at the close and finishing lower for the twelfth session in a row. |
| 3) | The MWZ/MWH spread continued its rally to -0.50 cents yesterday, supported by unwinding of KW/MW spreads and a seven-year low in deliverable stocks. | 3) | Ethanol prices fell to the lowest level since June 6, 2005 as RBOB gasoline futures and the larger energy complex continued to slide. |
CORN Corn is near unchanged Wednesday morning, supported by the 50-day moving average just under current prices but maintaining its downtrend from the November 8 highs. Concerns about ethanol and export demand have been real for the last several weeks but each week of poor data reinforces the idea this corn market is not invincible. Even if yield ideas prove smaller in either December or January, we are at the mercy of demand for price direction. Some of the worst ethanol production margins on record are currently being enjoyed by plants across the Midwest at the same time Ukraine and Argentina are competitive on corn export offers. The crop progress report was delayed until Tuesday due to Veterans Day. Harvest was pegged at 84% complete vs. 76% last week, 87% expected and 87% average. Largest delays are still in the Northern Plains to no one's surprise. However, the weather is conducive to getting the crop out and major progress should be made this week. Weekly export inspections totaled 44.8 million bushels vs. the 45.2mbu needed weekly. Total inspections are still up 86% from a year ago at 437.2mbu.
SOYBEANS Soybeans are better overnight into Wednesday, attempting to offset some of the losses from the past two days. January soybeans feel as though they have run up to resistance from the October and July highs and aren't ready break through those highs at this time. Soybean harvest was pegged at 88% complete vs. expectations for 91%, 83% last week and 93% average. The most notable delay to soybean harvest is in Kansas where only 74% of the state's beans are harvested vs. 90% average. This does not bode well for finishing winter wheat planting or getting additional acres on behind the soybean combines. Export inspections were solid at 47.8mbu, which is the second largest of the marketing year. Total inspections are still down 41% from a year ago. Despite the reduction in U.S. soybean exports of 160mbu, we remain fearful this isn't enough of a reduction given our current pace. Looking at analogs, you'd have to go back to 2011 with a 1.500 billion bushel export forecast to find something similar. It is our opinion part of the current 1.900bbu export forecast has some level of trade resolution between the U.S. and China already priced in. If sales remain slow, and no trade resolution is enacted soon, USDA will be forced to make further cuts, making the 1.0bbu carryout estimates look pretty wise.
WHEAT Wheat prices are mixed Wednesday morning, continuing the choppy but lower futures trend as of late. Adding support were the winter wheat planting progress numbers showing there is still 11% of intended acres left to seed as Kansas hits final insurance plant dates on November 15. Lots of SRW states are in jeopardy of seeing acres decline from last year as Arkansas is just 65% seeded vs. 82% average, while Missouri is down 10% from average and Oklahoma is down 11% from a year earlier. Z/H spreads were still a talker Tuesday, although the WZ/WH did an about face, closing 4 cents off the highs of the session. KW/W spreads recovered somewhat today, although funds are still trying to get positioned for an environment where storage charges are more expensive in Kansas City than in Chicago. MW/KW made new high for the move and are trading at the highest level since May. Another interesting nugget, hard red spring stocks in Duluth and Minneapolis fell by 694,000 bushels last week to 21.281 million bushels which is the lowest for this week since November 2011. SRW stocks fell 444,000 bushels to 77.342mbu, while HRW stocks dropped 1.046 million bushels to 122.831mbu. SRW stocks are the lowest in three years while HRW stocks remain record large for this week on the calendar.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.33 | -$0.04 | -$0.34 | Dec | $0.004 |
| Soybeans: | $7.85 | -$0.04 | -$0.93 | Jan | $0.013 |
| SRW Wheat: | $4.76 | -$0.12 | -$0.31 | Dec | $0.005 |
| HRW Wheat: | $4.57 | -$0.06 | -$0.30 | Dec | $0.010 |
| HRS Wheat: | $5.34 | -$0.03 | -$0.44 | Dec | $0.008 |
Tregg Cronin can be reached at tmcronin31@gmail.com
Tregg can be followed throughout the day on Twitter @5thWave_tcronin
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