DTN Before The Bell Grains

Morning CME Globex Update:

Thursday's Dow Jones average finished 166 points higher, and the overnight Dow futures reflect another 94-point gain. May crude oil is up 13 cents per barrel, the U.S. dollar is up 0.0460, and April gold is down $5.40 an ounce.

Other Markets:

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

Corn:

Corn continues its back and forth sideways trade. Friday's early morning weakness offsets Thursday's gains. More rhetoric rather than action regarding the status of the nine-month long trade war with China has us kicking the can down the road again. President Trump suggests that we are turning the corner, and President Xi states his desire for a rapid conclusion to the talks, but no mention of their next summit. Expectations for next Tuesday's USDA report have the average trade estimate on U.S. ending corn stocks now exceeding 2 billion bushels (bb) compared to 1.835 bb in March. Corn export sales commitments, although decent last week, still trail a year ago by 9%. Stiff competition from both South American and Ukraine is given credit for the slower pace. South Korea has been a formidable buyer of corn of late, but much of the optional origin purchases are expected to be sourced from cheaper South American locations. Argentine corn is at a discount of $10-$12 per metric ton to U.S. offers. Argentina's corn crop, now over 12% harvested, continues to move higher, as yields are coming in much better than expected. The latest estimates are nearing 47 million metric tons (mmt), with some thoughts that final production could be closer to 49-50 mmt. Ag Resource suggests that based on Argentine precipitation this year, yields could finish 6% to 10% above trend line. Argentina's primary growing areas have had more than double the moisture versus last year at this time. In the U.S., the forecast is mostly wet, and that wetness extends to the end of April with weather models adding rains for the Plains, western Midwest, Delta and Southeast. Delta and SE states are on tap for as much as 2"-5" of rain the next ten days, certain to delay planting efforts. Funds bought in an estimated 10,000 contracts on Thursday, leaving them an estimated 230,000 short, including options to begin Friday. DTN's National Corn Index closed at $3.40 on Thursday, with an average basis of 24 cents under May.

Soybeans:

The rally above $9.00 on May soybeans didn't last long as we are right back down on Friday morning. Undoubtedly, some disappointment over the lack of any concrete announcement from Washington has the trade disappointed again this morning. Export sales for last week were reported at a huge 72.4 million bushels (mb), with the lion's share of that to China, but sales commitments remain some 15% behind a year ago, with shipments still down over 30%. The average trade estimate for Tuesday's USDA ending stocks number is inching closer to 1 bb. As in corn, the Argentine soybean crop appears to be moving higher, with nearly 7% harvested. Rosario Grain Exchange is the latest to move production higher, now to 54 mmt compared to 52 mmt last month. This is still lower than USDA's 55 mmt estimate and other estimates as high as 56.5 mmt. It appears that Argentina will produce 17 mmt to 18 mmt more soybeans than a year ago. The U.S. will be hard-pressed to gain additional business in the absence of more China commitments. Adding to pressure on the soy market is the wet forecast projected into the end of April for much of the U.S., where planting delays are likely to add more unneeded soybean acres at the expense of corn and spring wheat. African swine fever continues to have a detrimental impact on China's soybeans needs with more cases discovered in China and surrounding countries. Friday's trade needs to hold support at $9.00 on May futures or risk breaking down even more. Resistance on the upside will be $9.10 to $9.12 on a rally. DTN's National Soybean Index closed at $8.21, and reflects an average basis of 86 cents under May.

Wheat:

Wheat markets are down, with Minneapolis wheat now going for a seventh straight lower finish. Minneapolis May has matched the contract low and has now fallen 48 cents just since March 25. A few factors that may have weighed on Minneapolis are ideas that Canadian spring wheat acres could be as much as 10% higher as canola acres take a hit on China concerns, and large unwinding of previously long Minneapolis spreads against both Chicago and Kansas City futures by speculators. U.S. wheat sales last week were a decent 25.9 mb, and the total commitments of 894 mb are up 6% versus a year ago. Shipments continue to lag last year by 4% and time is running out. Expectations for next Tuesday's USDA ending stocks number shows an average poll estimate of 1.075 bb according to Dow Jones, compared to last month's 1.055 bb. There is some wheat business around with the U.S. picking up 84,000 mt (3 mb) of a 119,000 mt Japanese mixed wheat tender. Despite U.S. wheat being competitive, it appears that French wheat, and possibly some Argentine, has been satisfying Algeria's recent buying splurge. Most Asian millers are likely covered until June now, and Black Sea wheat will begin to harvest in July. Funds appear unconcerned to remain short a significant wheat position. While rain is undoubtedly making grain in HRW areas where crop conditions are far ahead of last year, the excess rains in Delta and southern Midwest soft red growing areas is sure to cause more issues with the poorly rated SRW crop. DTN's National HRW index closed at $4.25, and the average basis is at 14 cents under May.

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

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