DTN Before The Bell Grain Comments

Morning CME Globex Update:

Corn 1 3/4 higher. Soybeans 4 higher. Wheat 2 higher. Spring wheat futures are lightly lower Thursday morning after some recent volatile gains. Speculative traders have continued amassing large net-short positions in the grain markets, but on Thursday morning, the selling fervor has mellowed out and most commodities are higher alongside crude oil's tentative recovery.

Other Markets:

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

Corn:

Commodities are broadly gaining Thursday morning while the U.S. Dollar Index continues to trend lower, and even corn futures are one to two cents higher. The 10-day forecast for most of the Midwest includes rain that may limit some fieldwork opportunities, but it also features enough dry windows of time for some corn planting to get done. Corn's export sales progress was only 848,200 metric tons this week, which was nevertheless an improvement over last week. The DTN National Corn Index, an average of cash bids around the country, came to $3.26 Wednesday, with the national average basis level steady at 36 cents under the May futures contract. The average cash bid for new crop corn was $3.44, which compared to the average new crop soybean bid at $8.86, shows a soybean-to-corn price ratio at 2.57-to-1, still economically favoring soybean acres as U.S. planting gets underway.

Soybeans:

Once again, soybeans led the ag sector's gains overnight, but the nearby May and July contracts still have not regained last week's highs. Ordinarily, there is only a weak substitution effect or price correlation between crude oil and edible oils (which can be used in biodiesel production) but this week, both crude oil and Malaysian palm oil prices happen to have posted sharp losses. Energy prices are stable Thursday morning, but an EIA report showing increased U.S. gasoline inventory was a severe shock to the market on Wednesday. Affected by this outside volatility, speculative traders in the soybean market have continued to build up their large net-short position, and it's remarkable that the front-month soybean chart is only down 2 cents for the week so far. U.S. export sales came to 225,000 metric tons of soybeans -- a suddenly much smaller performance than what has been seen in recent weeks (down 60 percent from the 4-week average), demonstrating a seasonal drop-off in business. The DTN National Soybean Index was $8.78, with average soybean basis remaining steady at 72 cents under the May futures contract.

Wheat:

The weekly export sales report showed 414,000 metric tons of wheat sold in the current marketing year and 137,200 metric tons sold for the rapidly-approaching 2017-18 marketing year, a slightly weaker week-over-week performance that shouldn't influence futures prices much on Thursday. With the drought concerns for the Southern Plains of the U.S. diminishing day by day with every new rain forecast and every weekly release of the U.S. Drought Monitor, there isn't much of a bullish weather story anywhere in the world for the wheat market to focus on. Prices may continue to drift sideways, with the benchmark front-month Chicago wheat contract trading around $4.20 on the morning of 4/20. The spot priced SRW Index came to $3.80, showing national average SRW basis steady at 39 cents under the May Chicago contract. The HRW Index at $3.27 showed average basis steady at 90 cents under the May Kansas City contract, and the average spot spring wheat bid collected by DTN Wednesday was $4.97 per bushel, or 40 cents under the May Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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