DTN Before The Bell Grains

Morning CME Globex Update:

Outside markets are mixed, with the Dow futures up 100 points, the U.S. dollar index is lower by .107, and crude oil is up 6 cents per barrel. February gold is $3.60 lower. It is a National day of mourning today to honor former President George HW Bush. Government offices are closed and key reports are delayed - the EIA energy report to Thursday, the export sales report to Friday and CFTC on Monday.

Other Markets:

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

Corn:

Corn is slightly lower following Tuesday's nearly 3-cent higher close. China overnight reiterated its commitment to honor the 90-day truce and they expect to make a deal on a longer term trade agreement. Conflicting reports from the White House yesterday were taken in a bearish way in the equities markets, pummeling the major indices. Next week promises drier weather which may help final harvest efforts. Funds have bought in corn in the past week, including an estimated 8,000 contracts on Tuesday, and their net short has been whittled down significantly. While U.S. corn export shipments have been running at a good clip, Ukraine's corn basis has fallen, looking for demand as the Azov Sea, shut off for a bit, is now reopened. Shipping should resume from there. Corn finished on Tuesday above some key moving averages with the post G-20 gap still in place. The trade would like to see some concrete evidence of China purchases soon, and rumors abound of large purchases in the works of not only U.S. soybeans, but also of corn, wheat and ethanol. Cash markets have not confirmed such. March corn DTN's National Corn Index closed at $3.47 on Tuesday, with an average basis of 38 under March -- stronger.

Soybeans:

Soybeans put in an impressive performance on Tuesday, finishing a nickel higher despite the plunge in financial markets. So far Wednesday, both soybeans and bean oil remain above some key moving averages as trade still holds out hope to see some China purchases of soybeans soon. Bean oil and meal are slightly lower to begin. The window for new U.S. sales to China is slowly closing as some new crop Brazil beans will become available at the end of January and February as harvest accelerates there. There is more and more talk of the impending record and growing Brazilian bean crop with new estimates ranging from 122 to 130 million metric tons (mmt) of soybeans. Celeres suggests that the crop could be between 123 and 129 mmt. Ag Resource' Latin American office is 121.8 mmt now. Ideas are that Brazil could export 2 million tons in late January and up to 5 mmt in February. Many feel that a minimum purchase of 5 mmt of U.S. beans will be made by Sinograin, with rumors of up to 8 mmt of total China purchases of U.S beans soon. Some actual purchases will need to be seen soon. DTN's National Soybean Index closed at $8.24, and reflects an average basis of 88 cents under January.

Wheat:

Wheat was the dog yesterday, and is weak again today with all three major markets under pressure. News that Egypt may delay opening letters of credit on as much as 945,000 metric tons on wheat, and delay shipment for 30-45 days, is weighing on markets, as is the much wetter forecast for European and Black Sea wheat areas, alleviating drought conditions. U.S. wheat is said to be the cheapest offer to Iraq, but that has not guaranteed the business of late. There are a host of other wheat tenders around, with Syria, Bangladesh, Taiwan, Japan and Ethiopia all seeking wheat. Jordan bought 60,000 mmt. The U.S. SRW basis has improved, while HRW and HRS have weakened, as exports remain dismal. DTN's National HRW index closed at $4.69, and the average basis is at 36 under March.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow Dana on Twitter @mantini_R

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