DTN Before The Bell Grains

DTN Before The Bell Grains

CME GLOBEX RECAP:

December corn is down 3 1/2, November soybeans are down 13 1/2. December KC wheat is down 9 3/4, Dec Chicago wheat is down 9 1/4, and December MIAX Minneapolis wheat is down .0950 cents. 

OUTSIDE MARKETS:

The Dow Jones Industrials Index fell 92 points Friday and Dow futures are down 417 points early Tuesday. October crude oil is up $0.98 per barrel. The U.S. Dollar Index is up .817 and October gold is up $26.10 an ounce.

CORN:

December corn futures are lower early Tuesday following a long weekend which featured more showers across both the Western Corn Belt and Plains. However, rain again avoided the dry eastern and southern corn areas of the belt. The week ahead features a front moving through the belt this week along with another burst of cool air. A front will also move through the Northern Plains and into the Upper Midwest, bringing showers. Traders are questioning the dry spell the area from Missouri to Ohio has endured in the past several weeks. That, along with the widespread rust that has been noted, could clip corn and soy yields. So far, early September looks to be more wet, which could help soybeans. A light frost could occur on the weekend in parts of Iowa, Illinois and Minnesota. The big news over the weekend is the meeting between China, Russia and India looking to form a coalition, and Russia has agreed to build a natural gas pipeline to China. A U.S Appellate court ruled the Trump tariffs are illegal and that is likely to be heard by the Supreme Court in October. U.S. corn demand remains solid but following late-week meetings with a China trade representative, there was no new deal agreed to. In South America, Argentina has experienced good rain the past few months and southern Brazil has also received some decent rain. Managed money funds have continued to slowly reduce their net-short position in corn, which as of Tuesday was still close to 111,000 contracts. DTN’s National Corn Index closed at $3.79 and 41 cents below the December contract.

SOYBEANS:

The failure to secure a trade deal with China after last week’s meeting with the primary China trade representative has sent soybeans reeling early Tuesday. Time is running thin for securing some sort of soy-specific trade agreement with the world’s number one soy importer, and the chance that some of that export business may have been lost is growing by the week. The next meeting between the U.S. and China will likely not occur until October-November. Along with the brewing coalition between China, India, and Russia late last week, traders begin the new week with a pessimistic attitude. Some rain over the long weekend certainly helped soybeans in the western and central Plains, but areas to the east and south have been too dry in the last several weeks. Traders remember when August had a dry finish a year ago, taking the top end off corn and soy yields. The fact that China is believed to have covered October needs and even as much as 25% of November needs has seemingly reduced the need to buy U.S. beans, and one prominent farm advisory firm has already dropped U.S. annual soy exports by over 300 million bushels (mb). Outstanding soybean sales this year are down 9% from a year ago and the lowest since 2014 while new-crop soy sales at 266 mb are 108 mb lower than last year. A deal with China is surely needed soon. Soybean meal is under pressure early as several plants have come back online in the U.S., while higher palm oil (up 2.15%) and crude oil futures are boosting bean oil prices early Tuesday. Funds have cut their soymeal net-short in half versus weeks ago and have strangely gone net-long the soybean market. November soybean momentum appears to be rolling over. Equities are lower on concern over tariffs and interest rates and September is generally a weak period for the stock market. DTN’s National Soybean Index closed at $9.83 with a soybean basis of 72 under the November futures.

WHEAT:

Wheat markets start the new week under heavy pressure. Paris milling wheat’s December contract slipped to another new low early Tuesday as has the MIAX Minneapolis December contract. Pressure continues to emanate from Russia, where a growing wheat crop and aggressive export prices are weighing on world values. Russian FOB prices for 12.5% protein wheat slipped another $5 metric ton (mt) Tuesday to just $230 mt. That is down about $15 mt from a few weeks ago. Some analysts see the Russian wheat crop as high as 86 million metric tons (mmt) to 87 mmt compared to USDA at 83.5 mmt. Meanwhile the Australian wheat crop is pegged at 33.8 mmt, according to the ag minister there, and though 1% lower than a year ago, that would be 22% higher than the 10-year average. The sharp rise in the U.S. Dollar Index early Tuesday is no doubt adding some pressure to wheat prices. Also adding to weakness is the fact that Ukraine grain exports in August are up 16% compared to July. Managed money funds last week reduced their net-short in Chicago by 18,000 contracts while keeping their KC position about the same. The combined net-short in those two markets is still 130,000 contracts. Chicago and KC are both hovering just above the contract lows. DTN’s National HRW Index closed at $4.50 and 70 under the December futures board.

Rhett Montgomery can be reached at Rhett.Montgomery@dtn.com