DTN Before The Bell Grains

Morning CME Globex Update:

Global equities markets are mostly higher, with the Dow futures pointing to a 234-point gain in the overnight, May crude oil is up 91 cents per barrel, the U.S. dollar index is down 0.3660 and June gold is up $2.10 an ounce.

Other Markets:

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

Corn:

Once again, corn futures are little changed in slow overnight trade. The focus of trade since Thursday appears to be on U.S. pork after China bought 77,700 metric tons (mt) of U.S. pork in the week ended April 4. That purchase, the equivalent of 171 million pounds, is called the second largest ever. This brings total commitments to 143,000 mt, 60,000 mt higher than the last record set in 2016, according to Linn Group. Ag Resource projects Chinese pork production to fall 10% in 2019, with China pork imports of up to 2.2 million metric tons (mmt). Rabobank is much more enthusiastic, saying that due to African swine fever, Chinese pork production is estimated to be as much as 30% lower, and they estimate that China could import up to 4 mmt versus their previous estimate of 1.5 mmt. June hog futures are up again and challenging the recent high. U.S. corn export demand, on the other hand, appears to be slowing, with last week's 21.5 million bushel (mb) sales well under the 27.6 mb per week needed to achieve USDA's yearly projection. With Argentina's corn harvest now close to 21% done, crop production estimates are still moving higher, with the Rosario Exchange moving to 48 mmt and Buenos Aires Exchange raising both Argentine corn and soy estimates. Argentine corn is called $12 to $14/mt cheaper than U.S. corn offers currently. South Korea's KFA was rumored to have bought 63,500 mt of corn on Thursday and that is optional origin for October. Managed funds sold an estimated 10,000 corn contracts on Thursday and remain net short an estimated 270,000 contracts, including options. Look for May corn support in the $3.55-$3.57 area on a break and good resistance in the $3.66-$3.70 area. Weather in the central and upper Midwest is very challenging and likely to lead to planting delays, with up to 30" of snow recorded in parts of SD. Cool and wet is the forecast for the southern Midwest and Delta, also providing problems. DTN's National Corn Index closed at $3.37 on Thursday, with an average basis of 23 cents under May.

Soybeans:

Soybeans continue to move either side of $9.00 on May in light volume trade. Traders are reluctant to take on new positions with the possibility of a China announcement at any time. Progress is reported to be moving forward with the enforcement issue, one of the last key issues to be resolved, thought to be closer to a final solution. As in corn, soybean production from South America is on the upswing. Although CONAB,the supply and statistical agency in Brazil, is well under the trade average, they raised Brazil's soy production to 113.8 mmt, far lower than USDA's 117 mmt. Argentina's crop was raised by both the Rosario and Buenos Aires exchanges by 1-2 mmt each, with Rosario's 56 mmt estimate a whopping 18.2 mmt higher than last year's drought-reduced crop. U.S. soybean export sales continue to reflect a poor pace, and U.S. soy shipments are still 406 mb below last year. Although China's soy imports for March were up 10% versus February, they remain down 13% for the year, with China imports from the U.S. said to be down 14.4% for the first three months of 2019. While the U.S.-China trade dispute is partly to blame, African swine fever continues to expand and has cut demand. Another case of ASF was found on Friday, bringing the total number of cases to 120 since August. U.S. weather continues to be an issue, with the major storm in the western belt and Northern Plains likely to lead to seeding delays, and possibly add more soybean acres. Watch for May soybeans to support at the $8.90-$8.95 range and find selling in the $9.10-$9.12 range. DTN's National Soybean Index closed at $8.11, and reflects an average basis of 84 cents under May.

Wheat:

While Minneapolis futures are down four cents after a two-day surge in prices, Chicago and Kansas City were higher in the overnight but have faltered. U.S. wheat may garner some much needed export business. Algeria's Thursday purchase of up to 540,000 mt was thought to include a sizeable chunk of U.S. hard red winter (HRW), while the two cheapest offers for Egypt's GASC tender are said to be U.S. soft red (SRW). Minneapolis continues to be firmer than expected despite the April USDA report estimating hard red spring (HRS) ending stocks to be the highest since 1987-1988. Expected difficulty in planting spring wheat and moving supplies as parts of SD, ND and MN got pummeled with snow, has supported that market. U.S. wheat export sales were dismal last week at just 10 mb, but the recent price plunge has given the U.S. a competitive edge. Shipments of wheat, just 21.6 mb in the week ending April 4, need to average closer to 31 mb each week, a tall task. Funds are comfortable sitting with a large net-short position in both Chicago and Kansas City, with only a China announcement that includes wheat likely to force them out. DTN's National HRW index closed at $4.18, and the average basis is at 13 cents under May.

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

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