DTN Before The Bell Grain Comments

Morning CME Globex Update:

May K.C. wheat was up 11 1/4 cents early Tuesday, prompted by USDA's poor crop ratings for U.S. winter wheat. Soybeans were also higher early, helped by signs of increased demand for soybeans in Brazil.

Other Markets:

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

Corn:

May corn was up a quarter-cent early with Tuesday morning's weather map showing snow in the northwestern U.S. Plains and rain from Illinois to Pennsylvania. More rain is expected to develop Tuesday along the Mississippi Delta and Ohio River Valley, two areas that have already had plenty this spring. For most of the Corn Belt, soil temperatures remain too cold for planting and will not get much help this week. Further south, Brazil's second corn crop should be off to a good start with favorable conditions. Argentina received rain over the weekend through Monday, but crops will find little benefit this late in the season. Tuesday's satellite map is mostly dry for Brazil and Argentina and is expected to stay dry again this week for Argentina. Fundamentally, the outlook for corn prices is neutral early in 2018 (see Tuesday's article, "Is Corn as Bullish as It Looks?"), even with USDA's lower planting estimate. Technically, the trend in May corn is up, but is also running into resistance at last year's spot high of $3.94 1/2. DTN's National Corn Index closed at $3.52 Monday, back near its highest prices since June 2016 and priced 36 cents below the May contract. In outside markets, the June U.S. dollar index is quiet, trading up 0.01 while the Dow Jones futures are up 178 points.

Soybeans:

May soybeans were up 7 3/4 cents early, taking back most of Monday's drop with help from a mix of commercial and noncommercial buying. Soybean traders aren't directly concerned about soybean planting yet, but will be keeping an eye on corn's progress, which is off to a slow start and still has time. In South America, signs of remarkable demand are starting to emerge with Brazil's FOB soybean price rising to its highest level in over a year, 34 cents above soybeans' FOB price in New Orleans. Keep in mind this is happening at a time when Brazil is in the latter stages of a near-record soybean harvest and U.S. soybean exports are dragging. Clearly, while China has not specifically proposed soybeans on the list of tariffs, trade war economics has been at work in 2018 and has distorted the balance of supplies between the U.S. and Brazil. Fundamentally, the outlook for U.S. soybean prices leans bearish as China continues to avoid U.S. purchases. Technically, the trend is sideways for old-crop soybeans and up for new-crop soybeans where commercial demand is stronger. DTN's National Soybean Index closed at $9.59 Monday, down from its highest prices in a year and priced 76 cents below the May contract.

Wheat:

May Chicago wheat was up 5 3/4 cents and May K.C. wheat was up 11 1/4 cents, partly responding to USDA's first Crop Progress report of 2018. Late Monday, USDA said 32% of U.S. winter wheat was rated good-to-excellent, resulting in the lowest DTN Winter Wheat Index since 2002. Only 10% of winter wheat in Kansas was rated good and none was rated excellent, a poor showing for the winter wheat state that typically has the largest production. Going by the seven-day forecast, those conditions are not likely to get better anytime soon as the southwestern U.S. Plains is expected to remain dry with warmer temperatures while more rain falls on the SRW wheat crop in the eastern Midwest. Fire danger remains a concern in western Kansas and the Texas Panhandle. While the situation is troubling for U.S. wheat production in 2018, futures spreads in wheat are showing no signs of concern among commercials about obtaining the wheat they need. Technically, the trends remain down for all three wheats. DTN's National SRW index closed at $4.15 Monday, near its lowest close in over a month and 31 cents below the May contract.

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

Follow Todd on Twitter @ToddHultman1

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