DTN Before The Bell Grain Comments

Morning CME Globex Update:

At 8 a.m. CST, USDA announced China bought 7.3 million bushels (198,00 mt) of U.S. soybeans and another 4.4 million bushels (121,000 mt) were sold to unknown destinations, both for 2017-18. 20,000 metric tons of soybean oil were also sold to unknown for 2017-18. May soybeans were starting higher with another dry day expected in Argentina. In the wake of President Trump's announcement to enact tariffs on steel and aluminum, the stock market is on track to open lower and April gold is up $18.10.

Other Markets:

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

Corn:

May corn was unchanged early Friday, staying near its highest prices in six months with a dry Argentina still offering support to row crops. Fridays are often quiet, but in this case with financial traders showing a defensive reaction to the anticipation of steel and aluminum tariffs, there may be some spillover of anxiety in Friday's grain markets to watch for. On one hand, this year's drought in Argentina is an unusual bullish event that is helping lift corn prices out of their post-harvest depression. On the other hand, a general upward move in prices is what normally takes place this time of year while corn is stored away. Even though old-crop corn supplies remain plentiful, cash corn prices in most parts of the country are still too low to encourage much movement of grain. For now, the trend remains up in May corn with help from poor crop conditions in Argentina. DTN's National Corn Index closed at $3.50 Thursday, priced 37 cents below the May contract and at its highest price in seven months. In outside markets, the March U.S. dollar index is down 0.41 and April gold is up $18.20 as traders turn defensive in the face of increasing trade tensions, primarily with China.

Soybeans:

At 8 a.m. CST, USDA announced China bought 7.3 million bushels (198,00 mt) of U.S. soybeans and another 4.4 million bushels (121,000 mt) were sold to unknown destinations, both for 2017-18. 20,000 metric tons of soybean oil were also sold to unknown for 2017-18. May soybeans were up 8 1/4 cents earlier Friday, still finding support from another day of mostly dry weather on South America's satellite map and a seven-day forecast that is mostly dry, except for an area of rain in northern Argentina. This week's drier weather in Brazil will be helpful for harvest progress, but the anticipation of Brazil's big crop has lost some of its bearishness while Argentina's soybean crop has gone from last year's 57.8 mmt (2.1 bb) to Thursday's estimate of 44.0 mmt (1.6 bb) from the Buenos Aires Grain Exchange. The real value of this season's Argentinian drought is that, not only has it distracted traders from the bearishness of Brazil's 4.1 billion bushel soybean harvest, but it has also made it more difficult for China to avoid future purchases of U.S. soybeans and thereby, limited their options in responding to measures like the new steel and aluminum tariffs. Even so, increased trade tensions with China are a bearish risk for soybean prices in a chess game that is likely to continue for years. For now, the trend are clearly up in May soybeans and meal. DTN's National Soybean Index closed at $9.89 Thursday, at its highest price in over a year and priced 79 cents below the May contract.

Wheat:

May Chicago wheat was down 6 1/2 cents and May K.C. wheat was down 3 3/4 cents early Friday, taking pauses after climbing higher every day this week. After seeing K.C. wheat prices go straight up this week to their highest close in seven months, it would be understandable to see some traders take profits on a Friday and avoid the possibility of showing up on Monday with a change in the forecast. On the other hand, weather forecasts show a consistent expectation for dry weather in the southwestern Plains whether the time frame is three days or three months. In the current seven-day outlook, the western Plains are expected to be mostly dry, except for precipitation in the Dakotas the next few days. Lighter amounts should help flooding concerns around the Ohio River Valley, but the Delta is expecting more moderate rain amounts. It is always difficult to call a volatile, weather-driven market as wheat has become, but there is no argument that the trends remain up in winter wheat. DTN's National SRW index closed at $4.78 Monday, at its highest price in seven months and priced 37 cents below the May contract.

Todd Hultman can be reachedat todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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