DTN Before The Bell Grain Comments

Morning CME Globex Update:

May soybeans and meal were both lower early Friday after the Chinese government proposed its own set of new tariffs on U.S. goods in response to President Trump's steel and aluminum tariffs. Soybeans were not yet on the list, but pork was.

Other Markets:

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

Corn:

May corn was down 3 3/4 cents early Friday, caught in a wave of ag sector selling after the Chinese government responded to President Trump's tariffs on steel and aluminum with its own set of proposed tariffs on U.S. goods, including a 25% tariff on U.S. pork. Soybeans are not yet on the list, but if approved, China's new tariffs could take effect on Mar. 31. Unfortunately for grain producers, without the trade war distraction, corn probably would have traded higher early Friday after the Buenos Aires Grain Exchange lowered its corn crop estimate late Thursday, from 34.0 to 32.0 mmt (1.26 bb). The exchange also said 75% of the corn crop was rated either poor or very poor. 13% was harvested and 34% was considered mature. What started as La Nina-related dry weather in January has become serious crop loss for Argentina in 2018. Early Friday, USDA said last week's export sales and shipments of corn totaled 57.9 and 54.1 million bushels respectively, a bearish combination that has total corn shipments down 26% in 2017-18 from a year ago. Corn fundamentals were not all that bullish in the first place, but may not matter for a while as the escalating trade war dominates investor concerns. Weekly price momentum remains bearish for corn. DTN's National Corn Index closed at $3.39 Thursday, near the lowest close in three weeks and priced 37 cents below the May contract. In outside markets, the June U.S. dollar index is down 0.28 and Dow Jones futures are up 5 points early, after a 724 point loss on Thursday.

Soybeans:

May soybeans were down 9 1/2 cents at the morning break, hit by a mix of commercial and noncommercial selling in soybeans and meal after news spread of China's retaliation described above. As with corn, if not for investor concerns about hostile trade changes with China, soybeans would have had a chance to trade higher early Friday as the Buenos Aires Grain Exchange lowered its soybean crop estimate late Thursday, from 42.0 to 39.5 mmt (1.45 bb). 80% of the crop was rated either poor or very poor and 18% was considered mature. That is not to say that all is bullish for soybeans as Brazil continues to harvest a near-record soybean crop and the U.S. is getting closer to the possibility of record plantings in early 2018. U.S. soybean export activity has already been a bearish factor this season. Early Friday, USDA said last week's export sales and shipments of soybeans totaled 27.9 and 20.2 million bushels respectively, a new marketing year low of soybean exports. So far in 2017-18, U.S. soybean shipments are down 12% from a year ago. Even with Argentina's crop losses, soybeans' fundamentals still lean neutral-to-bearish and technically, weekly momentum for both, soybeans and meal remain down. Friday's news from China only adds more bearish pressure on bullish noncommercials to liquidate. DTN's National Soybean Index closed at $9.51 Thursday, near its lowest close in a month and priced 78 cents below the May contract.

Wheat:

May Chicago wheat was down 5 1/2 cents and May K.C. wheat was down 2 3/4 cents early Friday with bearish influence from grains' general reaction to news of China's new proposed tariffs. In the case of wheat, Friday's news is not as bearish as speculators are not as heavily long in wheat as they are in corn and soybeans. Also, the U.S. hasn't been exporting much wheat anyway and certainly not to China. Early Friday, USDA said last week's export sales and shipments of wheat totaled 9.7 and 17.4 million bushels respectively, another bearish combination that has total wheat shipments down 8% in 2017-18 from the previous year's slow pace. Here in the U.S., the seven-day forecast remains much the same with risk of wildfires still active in the western edge of the southwestern U.S. Plains and heavy, largely unwelcome rains headed for the SRW wheat crop in the southeastern Plains and lower Mississippi Delta. World wheat production remains a bearish concern in 2018 and technically, the trends are down in May Chicago and K.C. wheat. DTN's National SRW index closed at $4.23 Thursday, near its lowest close in a month and 33 cents below the May contract.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd on Twitter @ToddHultman1

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