DTN Before The Bell Grains

DTN Before The Bell Grains

CME GLOBEX RECAP:

December corn is down 1 1/2, November soybeans are up 2 3/4 cents. Sep KC wheat is down 1, Sep Chicago wheat is down 2, and Sep Minneapolis wheat is unchanged. 

OUTSIDE MARKETS:

The Dow Jones Industrials Index fell 62 points Tuesday and Dow futures are up 133 points early Wednesday. September crude oil is up $1.05 per barrel. The U.S. Dollar Index is down .282 and September gold is down $15.30 an ounce.

CORN:

December corn is lower for the fourth consecutive day, falling to the $4.00 level and setting new contract lows in the last three days. Mostly favorable weather continues to support calls for record corn yields and production. Just this week, commission house Stone X pegged the national corn yield at a record large 188.1 bushels per acre (bpa) with a crop of over 16.3 billion bushels (bb). S&P Global (formerly Informa) was not far behind, at 186 bpa. Yield estimates range from 182 bpa to as high as 190 bpa with a slew of private crop tours set to begin next week. While corn supplies are certainly on the upswing, U.S. corn demand remains solid. The Census report showed June corn exports to be nearly 266 million bushels (mb) and up 26% from a year ago. On Tuesday, another sale of 128,000 metric tons (mt) (5 mb) of corn was announced sold to unknown destinations. Live cattle prices again surged to a new high Tuesday. The EIA will be out with their weekly petroleum status report later Wednesday and that is expected to show a decline in ethanol production last week, although ethanol margins remain healthy. Brazil’s corn harvest is now 81% complete with what is expected to be a record large crop. With spot September corn futures falling to $3.80 on Tuesday, it appears the next level of support is in the $3.65-$3.70 area. Funds remain net short just under 200,000 contracts of corn. The corn market is very oversold at this point. DTN’s National Corn Index closed at $3.65 and 16 cents below the September contract.

SOYBEANS:

Soybean oil is bouncing for the first time in the past six days, supported by the rise in crude oil. That has pulled November beans slightly higher as well. Soymeal is near unchanged in quiet trade. Soybeans have been under pressure on favorable weather for pod-fill, rising yield and production estimates, and no solution to the current trade standoff with number one soy buyer China. Reportedly, Xi Jinping of China called President Trump on Tuesday with President Trump expecting a trade deal to be worked out soon. In the absence of such a deal, U.S. new-crop soybean sales are expected to suffer. Currently, there are no new-crop sales to China on the books at what is typically the start of a period where China books U.S. soybeans. China has been ramping up the purchase of South American beans even at a premium to U.S. beans as a safeguard. Just as in corn, crop analysts and farm advisory firms are estimating the soybean yield to be record large, with both Stone X and S&P Global putting out yield estimates of a record 53.5 bpa to 53.6 bpa. Right now, it appears U.S. soy ending stocks could be headed for the 400-mb-bushel level. However, without a new China trade agreement, that carryout could jump as high as 550 mb to 600 mb or more. Funds are net short an estimated 47,000 soy contracts and long a like amount of bean oil while carrying a net short in soymeal of 125,000 contracts and just under a record short. As in corn, the soy market is getting a bit oversold. DTN’s National Soybean Index closed at $9.34 with a soybean basis of 57 under the November futures.

WHEAT:

The wheat markets are lower again with all three wheat markets falling to a new contract low in Tuesday’s overnight session. More than adequate world wheat supplies and falling cash values are pressuring wheat. Just in the past week, Russian FOB values are reported to have declined by $6 mt to $237 mt FOB. EU exporters are seeking new buyers as well following their bountiful harvest. In the U.S. while winter wheat harvest wraps up the final 10%, the spring wheat harvest is just getting started at 5% done as of Sunday. U.S. wheat export demand is decent, with June Census exports at 63 mb and up 13% from a year ago. U.S. hard red winter and Russian FOB values are said to be at parity, but to many destinations, the U.S. has a freight disadvantage. In overnight tenders, Jordan passed on all offers for 120,000 mt of optional milling wheat, Bangladesh is in for a nominal 50,000 mt and Tunisia is tendering for 100,000 m of optional soft milling wheat. South Korea’s MFG picked up 65,000 mt of optional feed wheat overnight. Funds remain net short an estimated 113,000 contracts of KC and Chicago wheat. All three wheat markets are extremely oversold. DTN’s National HRW Index closed at $4.52 and 53 under the September futures board.