DTN Before The Bell Grains

Morning CME Globex Update:

March corn is up 3 cents, March soybeans are up 3 3/4 cents, Chicago March wheat is up 3/4 of a cent, Kansas City March is up 3/4 of a cent, and Minneapolis March is up 3 3/4 cents per bushel.

Other Markets:

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

Corn:

Corn is bouncing back after Wednesday's sharp fall. There has still been no announcement of China interest in U.S. corn or ethanol, and ethanol margins remain weak. Wednesday's EU Commission increase of the EU corn crop by 4.6 million metric ton (mmt) to 67.5 mmt weighed heavily on corn. Funds were thought to have sold (liquidated) some 10,000 contracts of corn on Wednesday. Despite the continued U.S. government shutdown, we were given export inspections, which came out at 39.2 million bushels (mb), which was less than expected and lower than the weekly average needed to reach USDA's yearly projection. However, the total shipments to date stand at 669 mb compared to just 388 million this time last year - up 72%. With the recent weakness, U.S. Gulf corn offers are said to be the cheapest feed grain in the world, but only by a slim margin, said to be $1 to $2 per metric ton. A major storm hitting the Plains and Midwest the next few days is expected to slow transportation, and will likely improve basis. The rain and snow mix is likely to further boost the U.S. soil moisture profile. Argentina is a worry, where frequent rains could hamper not only unharvested wheat, but also the 30% of corn and soybeans yet to be planted. Japan, Malaysia, Thailand, Mexico, Israel and Egypt are all said to be seeking corn in the near-term. March corn went almost exactly to the uptrend line and bounced. Overhead resistance will now be $3.80 to $3.81 on March futures. DTN's National Corn Index closed at $3.39 on Wednesday, with an average basis of 34 cents under the March.

Soybeans:

March soybeans are gaining back about one third of Wednesday's loss, and, as in corn, soybeans went right to the uptrend line support ($8.83 to $8.84 on March) and has bounced from there. Look for resistance to be strong at $9.10 to $9.15 on any further bounce. With the U.S. government closed down and a lack of flash sales reports, any ongoing China purchases will be a guessing game. There is another meeting scheduled for the week of Jan. 7 between U.S. and China trade officials in Beijing. China has bought roughly 3.5 mmt (if you include unknown sales) in the past few weeks, and China sources claim another 2 million tons are being booked, but this is still far less than the trade had anticipated. Export inspections of soybeans, at just 23.9 mb is far less than the 34.7 weekly total needed to hit the USDA yearly projection. Total shipments, at 581 mb, are well behind the 999 million last year at this time, and down 42%. Weather will be closely watched in South America. Although, overall favorable weather in much of Brazil, better chances of rain on the way to central Brazil, and Mato Grosso do Sul and Parana receiving just 10% to 20% of normal precipitation so far in December is worrisome. There are still some four to five weeks of important weather to endure, and warmer than normal temperatures. Frequent rains in Argentina are also an issue, with planting yet to be done on soybeans and corn. Funds were thought to have sold an estimated 7,000 contracts of soybeans Wednesday, and another 3,000 meal contracts. Palm oil was up 1% overnight following four straight declines. With early soybean harvest said to have begun in Brazil's Mato Grosso, there are some who feel that China may be waiting to buy new-crop Brazil rather than U.S. soybeans. Brazil FOB values on soybeans are said to be just 15 cents per bushel above the U.S. Gulf. January soybeans DTN's National Soybean Index closed at $7.88, reflecting an average basis of 95 cents under March.

Wheat:

Following Wednesday's sharp fall, which saw Minneapolis wheat make a new contract low, all three wheat markets are bouncing Thursday. As in corn and soybeans, last week's export inspections, at 19.9 mb, fell short of expectations and total shipments to date of 450 mb versus 525 mb last year, are still 14% below year-ago levels. The EU was said to have lowered their soft wheat production for 2018 by 600 mmt on Wednesday to 128.8 mmt, but this is far below the USDA estimate of 137.5 mmt. Argentina remains a big concern for wheat, with the 20% to 25% of harvest left to go there likely to see quality downgrades, as frequent rains over the next 10 days in the southern areas compromise the wheat crop. The major winter storm in the U.S. Plains the next few days will continue to be beneficial to the wheat that has been planted. There continues to be several countries seeking wheat, with Ethiopia, Syria, Indonesia, Colombia and Brazil all said to be seeking wheat. Jordan, once again is said to have passed on their 120,000 mt tender, following the receipt of just two offers. DTN's National HRW index closed at $4.67, and the average basis is at 29 cents under March.

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

Follow Dana on Twitter @mantini_r

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