DTN Before The Bell Grains

DTN Before The Bell Grains

CME GLOBEX RECAP:

December corn is up 3/4, November soybeans are down 6. December KC wheat is down 5, Dec Chicago wheat is down 5 1/4, and December MIAX Minneapolis wheat is down .0125 cents. 

OUTSIDE MARKETS:

The Dow Jones Industrials Index fell 24 points Wednesday and Dow futures are down 2 points early Thursday. October crude oil is down $0.76 per barrel. The U.S. Dollar Index is up .221 and October gold is down $28.90 an ounce.

CORN:

December corn futures are modestly higher but looking at the 50-day moving average just 3 cents below. Last week’s decline in crop ratings meant little to traders as that is typical for this time of year. The good-to-excellent rating remained very high in key states like Iowa and Wisconsin, though it appears a dry finish to the crop is in the cards in the 6- to 14-day portion of the forecast. However, Wednesday saw rain in parts of South Dakota, Nebraska, Iowa, northern Illinois, Wisconsin and Michigan. The weekend promises showers for the arid Eastern Corn Belt before turning dry again. A few fronts are expected to move through the Northern Plains and Upper Midwest and reach some drier areas of the east. A potential frost event could occur over the weekend for the north and Upper Midwest. While U.S. corn demand has been a bright spot for U.S. ag markets, demand is slowing, and we have not seen a flash sale in quite some time. Argentina, Ukraine and Brazil are all cheaper on an FOB basis than the U.S. for September and Argentina is cheaper as well through November. The EIA will be out with their weekly petroleum report and ethanol production is expected to rise by one percent. Average Midwest ethanol profits are reported to be close to 40 cents per gallon. December corn is likely to seek lower levels with a close below the $4.14 level. DTN’s National Corn Index closed at $3.77 and 41 cents below the December contract.

SOYBEANS:

The bearish response Wednesday from news that soy crop ratings fell by 4 percentage points and the fact that the weather has been abnormally dry in the southern and eastern belt seems to suggest the slowing demand outlook trumps the dry finish to the crop. The failure to this point to secure a grain-specific trade deal with China has bearish implications for U.S. soy demand. Rumors on Wednesday that China once again bought more cargoes of November soybeans from Brazil led to nearly double-digit losses in beans. That market, along with soy products, is lower again early Thursday. China continues to buy South American soy before U.S. despite a significant FOB discount of U.S. beans. Argentine soybeans are cheaper than U.S. into December. After some rain fell Wednesday in some key western and Upper Midwest soy areas, the weekend forecast promises more relief to drying soil in places like Illinois, Indiana, and Ohio. However, the overnight extended forecast in the 6- to 14-day portion of the models extracted moisture from the forecast. It sure looks like a mostly dry finish to the soy crop in eastern areas and we have not seen a flash sale announced since Aug. 19. Soybean oil is crashing again early Thursday and has broken under the 100-day moving average. Should October oil finish lower Thursday, it would be the seventh time in the past eight days. Soymeal got a minor boost Wednesday from the 185,000 mt sale of new-crop soymeal, but a lower close Thursday would be the fifth in the last six days. November soybeans plowed through the 100-day moving average early Thursday and is just 2 cents from penetrating the 50-day moving average. Without a China deal, the U.S. is faced with a big loss in demand and the window is closing. DTN’s National Soybean Index closed at $9.54 with a soybean basis of 77 under the November futures.

WHEAT:

Wheat markets continue to plummet on falling world offers with Chicago, Kansas City and even Paris milling wheat plunging to new lows early Thursday. With both Russian and Australian wheat crops increasing in the past few weeks and solid moisture in Argentina, world supplies of wheat are seeking limited end-user interest. Russian FOB values sank to $228 mt and that is down $17 mt from a few weeks ago. French and Ukraine wheat offers are also falling. The U.S. spring wheat harvest has moved to 72% complete as of Sunday. In tenders, Tunisia did buy 125,000 mt of optional soft milling wheat. Bangladesh is in for 50,000 mt and on Sept. 15 Syria will tender for 200,000 mt. Other than that, demand is slow. Adding to the bearish news is the forecast that the U.S. Southern Plains are expected to get another 1 to 2 inches of rain ahead of the seeding campaign for hard winter. Funds are holding onto their bearish bet on wheat and are likely adding to that. DTN’s National HRW Index closed at $4.33 and 78 under the December futures board.

Dana Mantini can be reached at Dana.Mantini@dtn.com