DTN Before The Bell Grain Comments

Morning CME Globex Update:

May soybeans and Minneapolis wheat were off to higher starts Thursday, both finding early support from commercial buying. Corn and winter wheat were a little higher with talk of drought still a concern.

Other Markets:

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

Corn:

May corn was up 2 cents early Thursday, holding near its highest prices in seven months with support from Argentina's drought and USDA's optimistic export outlook. Thursday's satellite map is dry across Argentina and Brazil, except for rain at Brazil's southern tip. Argentina's crop areas are expecting rain this weekend, but benefits to crops will be limited. Early Thursday, USDA said last week's export sales and shipments of corn totaled 98.6 and 55.4 million bushels respectively, a neutral to bearish showing for the week. Last week's sales were a new marketing year high, thanks to Japan, Taiwan, and South Korea. Total corn shipments however, are down 27% from a year ago. Until we can see more consistent evidence for USDA's higher corn export estimate, the fundamental outlook remains bearish for corn. Technically, the trend in May corn remains up, in line with its seasonal tendency. Noncommercials holding their largest net long position since June 2016 add bearish risk to corn prices. DTN's National Corn Index closed at $3.51 Wednesday, priced 38 cents below the May contract and down from its July high. In outside markets, the March U.S. dollar index is trading up 0.12.

Soybeans:

May soybeans were up 9 3/4 cents at the morning break, the initial leader among grains with early help from commercial buying and a gain of $3.00 in May soybean meal. Thursday's satellite map is mostly dry for South America which helps Brazil's harvest efforts and keeps Argentina's crop conditions poor. Early Thursday, USDA said last week's export sales and shipments of soybeans totaled 46.6 and 33.1 million bushels respectively, another bearish combination that has total soybean shipments down 12% in 2017-18 from a year ago. Later Thursday morning, the National Oilseed Processors will release its soybean crush estimate for February and Dow Jones' survey is expecting 148.5 million bushels, a 4% increase from last year, if true. Currently, the trend remains up in both, May soybeans and meal, but there are plenty of bearish risks ahead, including Brazil's big harvest, another big U.S. planting this spring, and increasing trade tensions with China. As with corn, there is also a large noncommercial holding of net longs that adds to the bearish risk in soybeans. DTN's National Soybean Index closed at $9.53 Wednesday, falling back from its highest price in over a year and priced 79 cents below the May contract.

Wheat:

May Chicago wheat was up 1 cent and May K.C. wheat was up 2 1/4 cents, both still finding support from red flag warnings around western Kansas and the Texas Panhandle. The seven-day forecast remains mostly dry for the southwestern Plains, but it is worth noting that other winter wheat areas in the central Plains and eastern Midwest are expecting moderate precipitation, which will be helpful to crops where flooding is not an issue. Even the northwestern U.S. Plains has chances for light to moderate precipitation, some of which will be snow. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 6.0 and 12.3 million bushels respectively, another bearish combination that has total wheat shipments down 8% in 2017-18 from a year ago. Currently, the uptrends in Chicago and K.C. wheat are still intact as shorts remain pressured by a dry forecast. Fundamentally, U.S. ending wheat stocks are likely to be lower in 2018-19, but the U.S. only requires 1.1 billion bushels for its own needs so it is difficult at this point to see a case for significantly higher prices. DTN's National SRW index closed at $4.54 Wednesday, down from its highest price in seven months and 35 cents below the May contract.

Todd Hultman can be reachedat todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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