DTN Before The Bell Grains

Morning CME Globex Update:

Outside markets are mixed with global equities showing pressure from expanding recession fears, which some tie to the ongoing trade war with China. Dow futures are reflecting a bit lower this morning, down 2 points, following the near 600-point drop on Friday. Crude oil is down $1.02 per barrel, the U.S. dollar index is up .074, and February gold is down $1.90.

Other Markets:

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

Corn:

Corn is a bit weaker as trade is once again disappointed in the absence of any concrete China buying news over the weekend. However, despite the free fall in equities markets, it has been impressive the way corn and beans have left post G-20 gaps on the charts. Corn exports have surely been the bright spot, with last week's sales once again big at over 46 million metric tons (mmt) and combined sales and shipments well ahead of last year, at 26.75 mmt. There is no sign that China has intentions yet to buy U.S. corn or corn byproducts, but China values have weakened and U.S. values have firmed. U.S. corn from the PNW is said to be very close to Brazil values landed in China. There is some talk Monday morning about China not only buying U.S. beans soon, but also natural gas and U.S. meats. The COT report is out today, and many feel that funds are slowly building a slight corn long, though the combined futures and options position may be still short modestly. Corn finished up some 8 cents for the week, so funds were net buyers for the past week. They were estimated to be net buyers of 6,000 contracts on Friday. DTN's National Corn Index closed at $3.49 on Friday, with an average basis of 36 cents under March stronger. At 8 a.m. USDA reported 1,645,920 mt corn sold to Mexico; 1,104,900 mt for 2018-2019 delivery and 541,020 mt for 2019-2020 delivery.

Soybeans:

Soybeans are a bit weaker as patient traders await some sort of confirmation that China will indeed adhere to the G-20 promise to buy large quantities of U.S. ag and energy "immediately". The most prevalent rumor appears to be that of China's Sinograin taking at least 5 mmt of U.S. soybeans to replenish their reserve. There have been other estimates ranging from 8 mmt to as high as 20 mmt. Nothing has evolved so far, and the basis is not indicative of behind the scenes buying yet. Ag Resource suggests that exporters are once again getting interest in offers to China of soybeans from the PNW recently. The arrest of a prominent tech CFO in Canada, allegedly at the request of the U.S., is still a thorn in the side of U.S grain and soy exporters. While weather in northern Brazil has dried out (favorable), heavy rains have moved into Argentina and southern Brazil. The Argentine rains, pegged at 3" to 6" this week, could lead to flooding, having some impact on recently planted soybeans, creating quantity and quality fears for the 50-60% of unharvested Argentine wheat. The USDA WASDE report will be out tomorrow and is likely show only modest U.S. and world balance sheet changes. Also, CONAB is expected to release their new update on Brazil soybean production, with the estimate at 122.4 mmt compared to 118 mmt in November and last year's record 119.8 mmt crop.It appears that Brazil is surely headed for a record large soy crop, depending on weather from here. U.S. soybean sales were better last week, at 32.7 million bushels (mb), but still lag last year by a lot. China November soybean imports at 5.4 mmt, are down 38% versus last year and the lowest monthly total in two years. Funds are estimated to have bought 6,000 contracts on Friday, and have whittled their combined futures plus options net short to 67,000 contracts. DTN's National Soybean Index closed at $8.29, and reflects an average basis of 87 cents under January, firmer. At 8 a.m. USDA reported 125,000 mt soybeans sold to unknown destinations for delivery in 2019-2020.

Wheat:

All three wheat futures markets are setting back, following Friday's sharp gains, which saw recently battered Kansas City wheat leading the pack higher at up 16 1/2 cents. Wheat export sales released Friday showed the largest total in months, at 26.2 mb. Total sales, however, still lag last year, by some 70 mb. Also supportive on Friday was the announced sales of 224,000 mt (8.2 million bushels) of HRW sold to unknown destinations. Some feel that this could be Ethiopia. We had also heard that the U.S. won the Iraq tender for 50,000 mt (1.8 mb), but have not seen solid confirmation. The wheat basis continues to march higher with firming mill bids. News that HRW wheat deliveries on the December contract were being loaded out into cash markets also helped to underpin wheat futures. In addition to the typical weekly buys of U.S. wheat from Taiwan and Japan, there remains a host of wheat tenders around, including those by Syria, Jordan, and Bangladesh. Russia and the Ukraine have been stiff competition, with Russia exports for January through October said to be 36.797 mmt compared to just 24.5 mmt last year at the same time. DTN's National HRW index closed at $4.80, and the average basis is at 36 cents under March.

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

Follow Dana on Twitter @mantini_R

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