DTN Before The Bell Grains

Morning CME Globex Update:

The Dow futures are up 70 points following Monday's 208-point lower close. March crude oil is up 47 cents per barrel, the U.S. dollar index is up 0.0330, and February gold continues to rise -- up $4.50 and at its highest level in many months. As round two of the trade talks are set to resume on Wednesday, President Trump is expected to meet with the Chinese Vice Premier on Thursday.

Other Markets:

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

Corn:

Corn futures continue to trade in a tight range, just above trend line support and the intersection of the major moving averages. Trade anxiously awaits any news from the China-U.S. trade meeting beginning Wednesday. However, the Trump administration decision on Monday to seek criminal charges against a Huawei executive could not come at a more inopportune time with the trade meetings ahead. Last week's export inspections on corn fell short of the amount needed each week to reach the USDA projection, but total shipments remain some 56% above a year ago. Last week's 35.2 million bushels (mb) was lower than the previous week's 44.4 mb. Total shipments, at 846 mb, are well above the 543 mb at this time last year. U.S. corn remains very competitive in the world, one of the world's cheapest feed grains for several weeks running, and it is possible that we will soon see significant catch-up export sales reported this week. Ag Resource reports that funds are net-long an estimated 55,000-60,000 contracts of corn, including options. By week's end it is hoped that we will see updated CFTC position data. Very cold temperatures invading much of the northern and central U.S. will result in transportation issues and stress to livestock, resulting in a basis firming. Weather in Brazil continues to be an issue, but the most recent forecast following current hot and dry weather, promises a pattern change to more seasonal temperatures and better rain chances as the remainder of the safrinha corn gets planted in the next three weeks. Look for March corn to continue to trade in a narrow range from $3.75 to $3.83 until we see updated export sales data and/or CFTC position data, and any word from the trade talks. December corn will continue to find plentiful selling above at $4.05-$4.10. Ag Resource pegs U.S. corn planting to rise by three million acres in 2019. DTN's National Corn Index closed at $3.40 on Monday, with an average basis of 31 cents under March.

Soybeans:

Soybeans are weaker again, with March futures sitting just below the 200-day moving average. Following last Friday's strength, many weather forecasters are touting a pattern change for Brazil a week from now, with a more seasonal and wetter pattern. While many in the trade seem to be in the 115-117 million metric ton (mmt) range on Brazil soy production, Ag Resource suggests that some unnamed private analysts have lowered their estimate to a range of 114-116 mmt. Last week's export inspections of soybeans at 34.2 mb fell sharply from the previous week's 41.6 mb. Total soy shipments at 751.8 mb still lag some 39% below the 1.228 billion bushels (bb) shipped last year. The total last week included some 12.6 mb to China. Ag Resource came out with their soybean S & D, and have 100 mb lower exports for the U.S., and a burdensome ending stocks number of 1.029 bb. For 2019/2020, they have bean acres falling to 85.5 million (versus 88.9), but still have ending stocks rising to 1.115 bb. Brazil has been selling soybeans to China at discounts to U.S., but is said to have few offers for February now, while Gulf soybeans landed in China are on par with Brazil for March, according to Linn Group. The recent spate of hot and dry weather in Brazil is thought to have dropped production in both Parana and Mato Grosso do Sul by some 10-12% from early season projections. Last week, the Parana crop was estimated to be 16.8 mmt compared to 19.2 mmt previously. March soybeans will continue to find support at $9.10-$9.15, with a rally above $9.27 3/4 thought to be bullish, and even more so in the event of a move above $9.41. The trade will await any news from the trade talks, and the resumption of both export sales data and CFTC position reports this week. DTN's National Soybean Index closed at $8.33, and reflects an average basis of 90 cents under March.

Wheat:

The wheat market is mixed to lower in the overnight trade session. The lowest offer on Egypt's GASC tender is US soft red winter wheat (SRW), at $243/mt on a FOB basis. However, it appears that once freight is included, both French and Romanian wheat appears cheaper. The cheapest Russian offer was $12/mt above U.S. SRW. Taiwan did purchase 55,000 mt of mixed U.S. wheat. A host of wheat tenders are seen this week, with Turkey, Ethiopia and Syria all seeking size. Last week's wheat export inspections left much to be desired, with just 13.3 mb, and total shipped so far at 528 mb is 11% below last year's 596 mb at this juncture. While U.S. wheat continues to be advantageously priced to many destinations, the trade is awaiting USDA confirmation of rumored wheat sales the past few weeks. A brutal cold spell is sinking into the upper and central Midwest and south, and some unprotected winter wheat could be at risk for winterkill. U.S. soft red winter in the east is thought to be most at risk, with a lack of snow cover in some areas. Kansas City March wheat is hovering just above the 20 and 50-day moving averages, and well below the 100-day. DTN's National HRW index closed at $4.82, and the average basis is at 25 cents under March, firmer.

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

Follow Dana on Twitter @mantini_r

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