DTN Early Word Grains
Grains Higher at Midweek Ahead of USDA, Harvest
December corn was up 1/4 cent, November soybeans were up 6 cents, and December K.C. wheat was up 3 3/4 cents.
CME Globex Recap:Equity markets are higher Wednesday morning while forex and debt markets are mixed ahead of the conclusion of the two-day Federal Open Market Committee meeting. There is a 100% expectation the Fed raises their benchmark interest rates by 0.25 basis point. Crude is slightly weaker Wednesday but holding near four-year highs. Grains are broadly higher but still inside recent ranges ahead of more data Friday.
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Previous closes on Tuesday showed the Dow Jones Industrial Average down 69.84 points at 26,492.21 and the S&P 500 down 3.81 points at 2,915.56 while the 10-year Treasury yield ended at 3.096%. Early Wednesday, DJIA futures were up 45.00. Asian markets are higher with Japan's Nikkei 225 up 93.53 points (0.39%) and China's Shanghai Composite up 25.67 (0.92%). European markets are mixed with London's FTSE 100 up 0.37 points (0.00%), Germany's DAX down 12.74 points (-0.10%), and France's CAC 40 up 11.68 points (0.21%). The euro was up 0.00015 at 1.18445 and the U.S. dollar index was up 0.0200 at 94.1640. September 30-year T-Bonds were up 8/32nds while December gold was down $1.80 at $1203.30 and November crude oil was down $0.22 at $72.06 Soybeans on China's Dalian Exchange closed up 0.11% while meal was up 0.98%..
| BULL | BEAR | ||
| 1) | December corn closed higher Tuesday for the fifth session in a row, the longest winning streak since the end of July. | 1) | The Argentine Peso fell as much as 5.34% Tuesday as the head of the Central Bank resigned. |
| 2) | Trade chatter suggests Iraq could purchase all 250,000 metric tons (MT) of wheat offered from both Canada and the United States over the weekend. | 2) | Aside from Iraq, inquiries for U.S. wheat remain limited and routine. The pace of sales and shipments is worrisome if we are to hit the USDA forecast. |
| 3) | The S&P 500/Bloomberg Commodity Index ratio traded the lowest level since the end of August, a sign commodities could be coming back in favor. | 3) | Estimated ethanol margins continue to fall, hitting the lowest levels in several years as higher energy prices are not translating into higher ethanol prices. |
CORN December corn has traded both sides overnight, trying to close higher for the sixth session in a row, the longest winning streak since July. December corn has now retraced over 38.2% of the entire $3.88 1/2 to $3.42 1/2 sell-off, and has the 50% retracement in its sights at $3.65. At the highs Wednesday, December 2019 corn traded $3.98, a level most producers would jump at to apply to their 2018 bushels. The price needs a long discussion, especially with the expectation for as many as 3 million to 4 million additional corn acres. Corn should find support at the $3.55 area on setbacks but should hold firm until Friday. Corn open interest is down 26,824 contracts since price bottomed last week, a sign the buying so far has been speculative short-covering.
SOYBEANS November soybeans were firmer overnight following a particularly volatile session Tuesday. Price traded up as much as 17 cents at the highs before settling just 4 3/4 cents higher at the close. Cash at the Gulf was firmer Tuesday, reversing the recent trend as better quality beans from the Corn Belt are needed to blend damaged beans from the Delta. Estimates being thrown around the trade suggest 1.0 million to 2.0 million metric tons of soybeans could be “put through” Argentina on their way to China. Even on the high end, 70 million bushels (mb) to 75 mb of soybeans hardly replaces the demand lost to China this year, although it is a start. Soybean planting in Brazil is ahead of schedule thanks to good soil moisture which could mean new-crop Brazilian beans competing with US even earlier than thought. November 2019 soybeans are trading at $9.17 Wednesday, creating a SX9/CZ9 ratio of 2.30. The ratio at this time leans corn but is by no means giving the price signal for farmers to shed 4 million to 8 million acres of soybeans like they potentially may need to do.
WHEAT Wheat will trade firmer Wednesday morning with the market trying to close in the opposite direction of the previous day's close for the fifth straight session. This sort of price action is the literal definition of choppy trade with wheat biding its time until the Small Grains Production report due out Friday. It is unlikely to be market-moving production changes, but the level of supplies as of Sept. 1 could have implications for full year feed/residual demand. Otherwise, traders are keeping a close eye on Montana, parts of Wyoming and several Eastern Corn Belt states as they have final plant dates for winter wheat on Oct. 5. The forecast for the seven-day and 6- to 14-day keeps below normal temperatures and above normal precipitation in place. Not exactly good drying weather. Minneapolis December wheat performed a bullish cross over this week with the 50-day moving average trading through and above the 100-day moving average on Monday.
| DTN Cash | Change From | National | Contract | Change from | ||
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day | |
| Corn: | $3.20 | $0.03 | -$0.44 | Dec | $0.000 | |
| Soybeans: | $7.43 | $0.04 | -$1.03 | Nov | -$0.003 | |
| SRW Wheat: | $4.76 | -$0.07 | -$0.45 | Dec | -$0.004 | |
| HRW Wheat: | $4.82 | -$0.07 | -$0.40 | Dec | $0.004 | |
| HRS Wheat: | $5.19 | -$0.03 | -$0.62 | Dec | $0.005 |
Tregg Cronin can be reached at tmcronin31@gmail.com
Follow Tregg Cronin on Twitter @5thWave_tcronin
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