DTN Before The Bell Grains

Morning CME Globex Update:

Dow futures are down 76 points in the overnight, the U.S. dollar index is down 0.2630, May crude oil is up 30 cents per barrel and April gold is up $9.70 an ounce.

Other Markets:

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

Corn:

Corn is little changed as we await the April USDA report Tuesday morning, which is expected to reveal a move higher in U.S. ending stocks to above 2 billion bushels (bb) again. Following the bearish March stocks report and in light of the continuing lag in U.S. corn export commitments, the results of Tuesday's USDA report are expected to be mildly bearish. Rains in Brazil's safrinha corn crop region were better than expected over the weekend, and crop size in both Brazil and Argentina is estimated to move higher, with Dow Jones trade estimate showing Brazil to be 94.7 million metric tons (mmt) and Argentina now 46.8 mmt, up from earlier estimates of 94.5 mmt and 46 mmt. The competition for U.S. corn exports will remain stiff with Ag Resource suggesting that for mid-summer, Argentine corn offers are roughly 50 cents per bushel under U.S. Gulf offers. Weather in the U.S. takes a turn for the worse this week with rain and even snow moving across the central U.S. and northern Plains. Heavy rains and flooding are likely across the Delta and southern Midwest, hampering planting efforts. Managed funds seem comfortable with their large bearish bet on corn, having sold another 62,000 contracts and holding a record net-short in corn of 269,000 contracts as of last week. Ethanol margins have once again moved into negative territory. Due to the floods in the Midwest, ethanol prices at the coasts have increased sharply, with the L.A. spread to Chicago now said to be at 50 cents per gallon premium versus a more normal 20 cents. There are some corn tenders around, with Iran tendering for 300,000 metric tons (mt) (11.8 million bushels) of corn along with a like amount of barley and soybean meal on April 9. South Korea's MFG was reported to have bought another 60,000 mt of optional origin corn from Cargill, likely to be sourced from South America, and so far unconfirmed. South Korea is estimated to have bought roughly 600,000 mt of corn in the last few weeks, but South America could supply the lion's share of that. Look for May corn to support at $3.60, with resistance $3.66-$3.70. DTN's National Corn Index closed at $3.38 on Friday, with an average basis of 25 cents under May.

Soybeans:

Soybeans are just slightly higher and gravitating around the benchmark $9.00 level on May soybeans. Underlying support comes from the promise of a U.S.-China trade deal soon, but Friday weakness illustrated a market that is becoming frustrated with the can being kicked down the road. President Trump says a deal is likely within four weeks, while some say it could be early June. Talks continue this week via teleconference. While Brazil's soybean crop has stabilized, if not improved lately, the Argentine soy crop is being elevated, with Dow Jones average estimate now at 55.5 mmt compared to last year's drought ravaged 37.8 mmt. Tuesday's USDA report is only expected to reveal a minor uptick in U.S. ending stocks to a still burdensome 913 million bushels (mb), according to Dow Jones. U.S. export commitments are still running sharply behind a year ago. The report is also expected to show an increased world ending stocks number to a new record large 108.4 mmt, up 9% versus last year. Managed funds, as in corn, increased their short bets, now sitting at net-short 92,000 soybeans along with 43,000 short soybean oil. The outlook for U.S. weather, with rain and snow in the upper Midwest and northern Plains, and heavy rains in the Delta and southeast Midwest, will likely add soybean acres if the extended wet forecast pans out. Look for $8.90-$8.95 to be support for May beans, with $9.10 to $9.15 being resistance. DTN's National Soybean Index closed at $8.14, and reflects an average basis of 85 cents under May.

Wheat:

Wheat started out lower in both Chicago and Kansas City, while being mildly higher in Minneapolis after setting four consecutive contract lows, and having been lower for seven straight trading sessions. Minneapolis May has now fallen 52 cents per bushel from the high on March 26. The highest stocks level in years, and a freeing up of rail shipments, along with unwinding of long Minneapolis and short both Chicago and KC markets has pummeled the spring wheat futures. As in corn, Tuesday's USDA report is likely to show yet another move toward a 1.1 bb ending stocks number on U.S. wheat, with the average Dow Jones estimate 1.076 bb versus 1.055 bb last month. The hard red winter (HRW) crop is growing, while U.S. soft red winter (SRW) conditions will continue to decline with heavy flooding likely in the Delta and south. Managed funds are holding net shorts of 86,000 contracts in Chicago wheat, and 49,000 short in Kansas City wheat. There are a few tenders around with Jordan seeking 120,000 mt (4.4 million bushels) of milling wheat, and Bangladesh 50,000 mt. On April 19, Ethiopia seeks 400,000 mt of wheat. DTN's National HRW index closed at $4.18 Friday, and the average basis is at 13 cents under May.

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

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