Corn and Soybeans Weaker; Wheat Markets Mixed to Lower

CME GLOBEX RECAP:

December corn is down 2 1/2, November soybeans are down 1 1/2. December KC wheat is unchanged, Dec Chicago wheat is down 1/4, and December MIAX Minneapolis wheat is down .0125.

OUTSIDE MARKETS:

December corn is down 2 1/2, November soybeans are down 1 1/2. December KC wheat is unchanged, Dec Chicago wheat is down 1/4, and December MIAX Minneapolis wheat is down .0125. The Dow Jones Industrials Index rose 144 points on Thursday and Dow futures are up 216 points early Friday. November crude oil is up $.06 per barrel. The U.S. Dollar Index is down .106 and November gold is down $46.40 an ounce.

CORN:

The corn market starts a few cents weaker early Friday after rallying a nickel Thursday. Grain markets moved higher in concert Thursday on short covering, a firmer basis, higher energy prices and some optimism over scheduled meetings with China’s trade representatives and leader that start later Friday in Malaysia. Corn is also firmer on general ideas that corn yield has fallen well below the initial USDA estimates. However, it is likely to still be a monster crop with some storage challenges as there remains over 5.5 billion bushels (bb) yet to collect. On a positive note, India has promised to limit the import of Russian crude oil and is likely to complete a trade deal with the U.S., which could include more soybean, soymeal and even corn purchases. The problem is that India has outlawed GMO corn. Weather in the U.S. is conducive to wrapping up the final stages of corn harvest while heavy rains are moving across the Southern Plains Friday. In South America, weather is, and expected to remain very favorable for both planting and crop growth for the crops already seeded. The Buenos Airies Exchange reported that corn seeding has now reached 34% complete. The government shutdown enters day 23 and is now the second longest ever. Traders expect to see the Consumer Price Index (CPI) later today, which will give a glimpse of inflation. Next week, the Federal Reserve is expected to lower rates again. Funds enter Friday net short an estimated 95,000 contracts still. Key on important moving averages, which cluster around the $4.18 to $4.20 area. On the upside, the September high at $4.31 1/4 should be the next resistance. DTN’s National Corn Index closed at $3.84 and 39 cents below the December contract.

SOYBEANS:

After climbing for six of the past 7 trading days, November soybeans are taking a bit of a breather early Friday with bean oil also lower and soymeal looking to finish higher for a seventh straight day. The rising soybean basis as hedge pressure wanes, harvest nears an end, and the optimism that this and next week’s meetings with China could be fruitful has buoyed the soy complex. While trade representatives begin a 3-day meeting in Malaysia, the meeting between President Trump and China’s Xi has been scheduled for next Thursday. Obviously, on the top of the list will be U.S. soybeans after China has ditched U.S. soybeans in favor of higher-priced South American soy. Sunday night’s Globex trade has the potential to result in a volatile reaction to talks. Meanwhile, with soybeans nearing the end of harvest, hedging has backed off as farmers, hopeful, have stored soybeans. The CIF soybean basis in one week has rallied 16 cents per bushel, partly due to higher barge freight. November soybean options expire today and first notice day for November will be next Friday. Weighing on soybeans would not only be the inability to secure a deal with China, but also a near perfect start to South America’s new-crop soybean planting and growth. The forecast is wet for both Argentina and Brazil into mid-November. The early start to Brazil planting and the potential for another record large crop of close to 180 million metric tons (mmt) that may begin harvest as early as late January, makes it a very narrow window for U.S. soy sales. On a positive note, the new trade deal with Japan and India could lead to increased soybean purchases from those countries. Funds covered shorts in both soybeans and soymeal on Thursday while bean oil rallied on the crude oil strength. Early Friday, palm oil’s weakness is pressuring bean oil. Soybeans and soymeal are very overbought on charts, which could be ripe for a correction. However, all eyes are on the U.S.-China trade talks in coming days. DTN’s National Soybean Index closed at $9.63 with a soybean basis of 72 under the November futures.

WHEAT:

Wheat markets rallied for a second straight day on Thursday, led by Kansas City, which rose above $5.00 for the first time since the end of September. That strength came despite the IGC raising world wheat production by another 8 mmt as funds began to cover some shorts. Wheat markets are mixed to mostly weaker early Friday. Rumors floated out there that China was inquiring about EU and Argentine wheat. Argentina’s FOB wheat price is currently the world’s bargain-priced wheat. Russia’s ag minister reported that Russia was nearing the end of harvest and have taken in 93.5 mmt and that is 8% above a year ago. Algeria on Thursday booked an estimated 600,000 metric tons (mt) of wheat, with some Argentine wheat possible, but the majority is thought to be sourced from Romania, Bulgaria and Ukraine. Heavy rain is moving across the Southern Plains early Friday with some flooding possible in parts of Texas and Oklahoma. Funds enter Friday trade still carrying a sizable net-short position in all three markets. DTN’s National HRW Index closed at $4.19 and 69 under the December futures board.

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