DTN Before The Bell Grain Comments

Grain Prices Moderate After Week's Wild Start

Elaine Kub
By  Elaine Kub , Contributing Analyst
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

Corn 3 lower. Soybeans 3/4 lower. Wheat 4 1/4 lower. Grains are being given some breathing room without another fresh high in the U.S. Dollar Index. The grain and oilseed markets have very few fundamental changes to trade on during late November, so quiet consolidation may be the order of the day Tuesday before volumes drop ahead of the Thanksgiving holiday.

Other Markets:

Dow Jones: Lower
U.S. Dollar Index: Lower
Gold: Higher
Crude Oil: Higher

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Corn:

Relatively quiet outside markets could allow the grain futures markets to explore prices on their own terms -- the U.S. Dollar Index is pulling back off Monday's fresh high, and the crude oil market continues to stabilize. For corn, this trend of sideways neutralization has led to mild three-cent losses Tuesday morning, keeping the front-month chart within the 10-cent range it has occupied for the past two weeks. Foreign bargain hunters (who don't celebrate our Thanksgiving holiday) will continue to look for opportunities in the U.S. grain sector throughout this week, but U.S. futures trading volumes will likely drop off somewhat after Tuesday's session. The DTN National Corn Index, an average of cash bids around the country, was $3.47 Monday, showing the national average basis level remained steady at 20 cents under the December futures contract.

Soybeans:

Soybean futures have stayed within a quiet 5-cent range overnight, a notable contrast to Monday's rollercoaster of overreaction. This market hit its lowest level since 2009 on the fear that Argentina's new political environment will automatically dump a glut of soybeans on the export market, but contracts ended Monday's session with higher prices once cooler heads saw the opportunity to buy valuable soybeans and counter that overreaction. The higher prices may make an appearance again Tuesday, especially if traders are willing to take bullish positions based on seasonal trends. Soybean prices tend to stay steady with their late November prices or float upwards through the month of December. The DTN National Soybean Index was $8.19 Monday afternoon, showing the U.S. average basis level remained steady at 45 cents under the January futures contract.

Wheat:

Among all the grain contracts, wheat prices are posting the most notable losses Tuesday morning, and even those losses are rather mild: 3 to 4 cents lower across all three classes of wheat. These losses correct Monday's high-flying gains of almost ten cents in some contracts. There are just not enough fundamentally bullish concerns for the global wheat supply to justify much of a rally at this point, although on the other hand, a dip in the U.S. Dollar Index Tuesday morning should prevent major bearishness during this session. The DTN National Soft Red Wheat Index closed at $4.49 Monday, demonstrating that the market for milling-quality low protein wheat continues to demand a supply-constrained premium over the HRW Index at $4.13. Showing a more normal intermarket spread, the HRS Index was $5.02 Monday. The national average basis level for spring wheat strengthened to 15 cents under the December Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

Follow Elaine Kub on Twitter @elainekub

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Elaine Kub