DTN Early Word Grains

6:00 a.m. CME Globex:

March corn was down 1 3/4 cents, March soybeans were down 4 1/4 cents, and March Chicago wheat was down 3 1/2 cents.

CME Globex Recap:

All three grains were lower early Tuesday with South America's next crops threatening to put an end to the run of this season's good demand in the U.S. The U.S. dollar index is down 0.23, allowing a modest rebound in commodity prices.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed up 142.79 points at 20,412.16. The NASDAQ Composite was up 29.83 points at 5,763.96 and the S&P 500 was up 12.15 points at 2,328.25 Monday. DJIA futures were down 13 points early Tuesday morning. Asian markets were mostly lower with Japan's Nikkei down 220 points (-1.1%), Hong Kong's Hang Seng down 7.97 points (-0.03%), and China's Shanghai Composite up 1.09 points (0.03%). European markets were mixed Tuesday with London's FTSE 100 up 8.48 points (0.1%), Germany's DAX down 1.05 points (-0.01%), and France's CAC 40 up 2.86 points (0.06%). The U.S. dollar index was down 0.23 at 100.79 while the euro was up 0.00195 at 1.06290. March 30-year T-Bonds were down 5/32nds at 151'07 while April gold was up $4.80 at $1,230.60. March crude oil was up $0.43 at $53.36 while Brent crude was up $0.54 at $56.13. Soybeans at the Dalian Exchange are higher overnight and Malaysian palm oil futures were up 0.4%.

	BULL		BEAR
1)	Corn, soybeans, and wheat continue to trend higher in spite of concerns of big South American crops.	1)	Increased corn and soybean production from South America is widely anticipated in early 2017 with the soybean harvest making good progress.
2)	U.S. corn shipments are up 67% in 2016-17 from a year ago.	2)	It is still not clear how trade relations will proceed with China and others -- or how they might retaliate.
3)	Warm temperatures are expected to return to the southwestern Plains later this week, enticing winter crops out of dormancy at an early date.	3)	U.S. wheat supplies remain burdensome.

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MORE COMMODITY-SPECIFIC COMMENTS

CORN March corn was down 1 3/4 cents early Tuesday, but is still near its highest prices in six months as corn continues to enjoy a season of increased demand before South America's next crops add to the world's supplies. With U.S. FOB corn prices currently over 30 cents a bushel cheaper than those in Brazil, it seems safe to say that demand should continue to support U.S. corn prices, at least for the next few months. Argentina has had problems with flooding this year, but so far, most crop estimates are staying close to USDA's 36.5 mmt. This week's forecast expects rain just east of the main crop area. March corn continues to trend gradually higher.

SOYBEANS March soybeans were down 4 1/4 cents early, showing reluctance to challenge the January high of $10.80 while Brazil's harvest continues to make progress. Soybean prices have been trending gradually higher since their harvest low in late-August, but you have to wonder if time is about up with so many estimates pointing a record crop on the way from Brazil. U.S. soybean exports have also been good in 2016-17 -- up 21% from a year ago, but it seems likely that China has been preparing for a showdown over trade terms. This is also the month when Brazil's exports typically pick up. A close below the latest swing low of $10.17, if it happened, would signal a bearish change.

WHEAT March Chicago wheat was down 3 1/2 cents early with a second day of beneficial precipitation in the southwestern Plains turning prices back after five consecutive higher closes. March K.C. wheat is also down, but just 2 cents in quiet trading. Wheat prices continue to emerge from their lows in December and DTN's National SRW Index of cash prices is at its highest level since June. Fundamentally, the correction was warranted, but it is hard to understand what might propel prices much higher this early in the season while supplies remain plentiful. Even so, March Chicago wheat remains in an uptrend.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.38	$0.01	-$0.37	Mar	$0.000
Soybeans:	$9.79	-$0.04	-$0.76	Mar	$0.002
SRW Wheat:	$4.15	$0.03	-$0.37	Mar	-$0.002
HRW Wheat:	$3.76	$0.06	-$0.91	Mar	-$0.001
HRS Wheat:	$5.31	-$0.01	-$0.39	May	-$0.009

Todd Hultmancan be reached at todd.hultman@dtn.com

Todd can be followed throughout the day at www.twitter.com\ToddHultman1

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