DTN Before The Bell Grain Comments

Rain Comes to Iowa

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

At 8 a.m. CDT, USDA announced 17.0 million bushels (463,000 mt) of U.S. soybeans were sold to unknown destinations and another 7.3 million bushels (198,000 mt) were sold to China, both for 2017-18. Iowa may not be heaven for corn crops this year, but the state is getting beneficial rain early Monday and that is helping grain prices start on a lower note. Illinois is hoping to share in this week's moisture, but coverage may be less than hoped for.

Other Markets:

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

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Corn:

December corn was down 3 1/4 cents early Monday while rain is falling around Iowa with more expected around Arkansas, Missouri, and Illinois the next few days. Illinois and Indiana have been drier lately and it will be interesting to see how much rain Illinois actually gets this week. Overall, "variable" continues to be the word for corn crops in 2017 and a smaller crop than last year's 15.15 billion bushel record seems certain, but excess supply still remains high and that is keeping prices under pressure as we get closer to harvest. Friday's CFTC data showed noncommercials slowly cutting down their net longs in corn, now down to 103,259 contracts as of Aug. 15. Their bullish position remains out of synch with this year's market and continues to be a source of selling pressure for prices. December corn continues to trade at its lowest prices in 2017 with no reason for potential buyers to get excited ahead of harvest. DTN's National Corn Index closed at $3.14 Friday, priced 38 cents below the September contract and at a new 2017 low. In outside markets, the September U.S. dollar index is down 0.06, staying near its lowest prices in two years while other commodities are mixed.

Soybeans:

At 8 a.m. CDT, USDA announced 17.0 million bushels (463,000 mt) of U.S. soybeans were sold to unknown destinations and another 7.3 million bushels (198,000 mt) were sold to China, both for 2017-18. Earlier, November soybeans were down 4 3/4 cents as light to moderate showers were offering much-needed help to Iowa's crops on Monday morning. Some of the rai is expected to reach Illinois the next few days where crops could also use more moisture, but the state may not get as much coverage as producers would like. The larger, seven-day forecast looks drier for the eastern Midwest with Illinois on the edge of possible rain. While soybeans still have a chance to produce a record crop in 2017, they also have a countervailing force in this year's demand and that is helping November prices to stay above the 2017 low of $9.07, so far. Friday's CFTC data showed noncommercials still lightly bullish in soybeans with 33,285 net longs as of Aug. 15. Commercials held 3,456 net longs, finding more attractive values at these lower prices. Soybean prices remain under bearish pressure at a time of year when prices typically trade lower, but are holding above their June low, thanks to active demand. DTN's National Soybean Index closed at $8.76 Friday, priced 62 cents below the November contract and holding above its lows in June.

Wheat:

December Chicago wheat was down 3/4 cent early Monday, staying near its lowest spot prices in over three months as traders lack a bullish reason to look forward to. A few light patches of scattered showers are seen around the southwestern Plains early Monday and a broad coverage of moderate amounts are expected across the southern Plains the next seven days which will be helpful for fall planting conditions. Monday afternoon's Crop Progress report is likely to show spring wheat harvest past the half-way mark and in these late-summer months, trading in wheat is apt to get quieter. Friday's CFTC data showed noncommercials lightly bearish in Chicago wheat with 12,828 net shorts as of Aug. 15. Commercials were net long 18,834 contracts as the two giants head back to their familiar corners. With world wheat supplies still plentiful, but U.S. wheat supplies lower than a year ago, winter wheat prices continue to look for support and should be close to finding a sideways trading range. DTN's National SRW index closed at $3.88 Friday, priced 28 cents below the September contract and at its lowest price in three months.

Todd Hultman can be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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