DTN Before The Bell Grains

Morning CME Globex Update:

July soybeans are holding a small gain early Wednesday in what could become a quiet day of trading ahead of Friday's WASDE report. Corn and wheat are slightly lower while Wednesday morning rains are covering much of the western U.S. Plains and central Midwest.

Other Markets:

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

Corn:

July corn is down 3 1/4 cents early Wednesday, even while moderate-to-heavy rains are falling from Texas to South Dakota, also including Iowa and southern Minnesota. After Wednesday, the forecast for much of the Corn Belt will be drier, except for rain in the southeastern U.S. this weekend. Corn planting remains a challenge in May, and it is not clear yet just how much work will get caught up or how many acres will be lost. Ready or not, USDA's May WASDE report will arrive at 11 a.m. CDT on Friday, May 10. If Dow Jones' survey of analysts is correct, U.S. ending corn stocks will be estimated at 2.142 billion bushels (bb) for 2019-20, an early start that has lots of unanswered questions and won't offer any insight into current planting problems. Fundamentally speaking, 2.14 bb is in line with the previous three years and suggests corn prices are likely to stay in the same sideways range we have seen since 2015. Technically, cash corn prices are holding in a sideways trading range as the market waits to see how planting will go this month. DTN's National Corn Index closed at $3.41 Tuesday, priced 26 cents below the July contract. In outside markets, the June U.S. dollar index is down 0.09 and most other commodities are lower, still feeling the bearish impact of trade talks with China not going well.

Soybeans:

July soybeans are up 1 cent early, a small gain that is keeping July prices near their lowest level in 10 years. As disastrous as 2008 was for the economy, the current situation for soybeans is among the most the most bearish scenarios since the late 1990s. As with corn, it is still difficult to say how planting is going to turn out in 2019, but Dow Jones' survey expects USDA to estimate old-crop U.S. ending soybean stocks at a record high 925 million bushels (mb) and new-crop stocks at 943 mb. Both of those numbers are at risk of coming out even higher as soybean exports are not keeping pace with USDA's current estimate. Also, the hopeful spin on how well trade talks were going got blown up this week after media sources reported China backed away from previous agreements, prompting President Donald Trump to increase tariffs on Chinese goods, starting Friday. U.S.-China trade talks will continue this week, but hope for an agreement anytime soon has vanished, and U.S. soybean prices remain under bearish pressure. Technically, both cash and future soybean prices are trending lower while trade talks go on. DTN's National Soybean Index closed at $7.45 Tuesday, trending lower and priced 86 cents below the July contract.

Wheat:

July K.C. wheat is trading down 1 1/4 cents early with rain falling up and down the western Plains, heavier amounts in Oklahoma. The National Weather Service has issued flash flood watches and warnings for Kansas, Oklahoma, Missouri and Arkansas. The region is expected to get a break from the moisture, except more rain returns to eastern Texas and Arkansas Friday into the weekend. The seven-day forecast is mostly dry for the Pacific Northwest where crops are doing well, but more unwelcome rain is expected in the eastern Midwest where SRW wheat crops are struggling with excess soil moisture. Outside of North America, the major wheat regions appear to be doing well in early 2019, adding to bearish pressures on prices. Dow Jones' survey expects USDA to start with a lower estimate of 272.8 million metric tons (mmt) (10.0 bb) of world ending wheat stocks for 2019-20, but the reality is that wheat stocks are more likely to increase in the new season. USDA's estimate of old-crop world ending wheat stocks is expected at 276.1 mmt (10.1 bb) on Friday. For now, the trends in all three U.S. wheat prices are down, but showing early hints of support. DTN's National HRW index closed at $3.88 Tuesday, 16 cents under the July contract and near its lowest prices in a year. DTN's National SRW index closed at $4.12, also up from its lowest prices in a year. May grain futures contracts expire on May 14.

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

FollowDanaon Twitter@mantini_r

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