DTN Before The Bell Grain Comments

Morning CME Globex Update:

May corn and soybeans were a little higher early Tuesday while May contracts of winter wheat were slightly higher. All three were ignoring Tuesday's higher U.S. dollar index, encouraged by higher starts in most other commodities.

Other Markets:

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

Corn:

May corn was up 2 cents early Tuesday, but was staying near its lowest prices in a month as traders wait for USDA's Grain Stocks and Prospective Plantings reports, due out Thursday at 11 a.m. CDT. Dow Jones' survey of analysts expects USDA will estimate 89.3 million acres of corn plantings, a number that sounds reasonable, but keep in mind this report has a history of surprises. Dow Jones also expects Mar. 1 corn stocks at 8.71 billion bushels and the actual number will tell us a lot about demand. Argentina's drought helped corn prices rally in early 2018 and even though the seven-day forecast remains mostly dry this week, Argentina's bullish impact has faded and it is difficult to find any other bullish argument for corn. Technically, the trend remains down in May corn. DTN's National Corn Index closed at $3.37 Monday, near its lowest close in a month and priced 37 cents below the May contract. In outside markets, the June U.S. dollar index is up 0.53, taking advantage of slow growth and low inflation in Europe. Other than gold and silver, most other commodities are trading higher.

Soybeans:

May soybeans were up 1 3/4 cents early, but are still near their lowest prices in March, caught between drought in Argentina and what could be a record soybean harvest in Brazil. Here in the U.S., Dow Jones's survey expects USDA to estimate soybean plantings at 90.9 million acres on Thursday, a new record high if true. Mar. 1 U.S. soybean stocks are expected at 2.04 billion bushels, also a record high, thanks to last fall's record harvest. The escalating trade war with China and lack of U.S. soybean exports continue to be bearish concerns for soybean prices and, given Brazil's big harvest, are likely to continue this summer. Argentina's drought has been a bullish surprise in early 2018, but the fundamental outlook for soybeans remains bearish as long as U.S. growing conditions remain favorable. For now, weekly momentum remains bearish for soybeans. DTN's National Soybean Index closed at $9.47 Monday, near its lowest close in a month and priced 78 cents below the May contract.

Wheat:

May Chicago wheat was up a quarter-cent early Tuesday, trading quiet, but also near its lowest prices in two months with rain in Oklahoma and near the Texas Panhandle where significant moisture hasn't been seen for several months until Monday. The three-day forecast expects the bulk of this week's rain to stretch from eastern Texas to Ohio, including another drenching of the Mississippi Delta while the western edge of the southwestern Plains has a chance for light amounts. This week's rain won't erase the southwestern drought, but it will offer moisture improvement at the margins. Late Monday, the state NASS office in Kansas said 49% of winter wheat was rated poor or very poor, down from 55% the previous week. Winter wheat crops in Texas and Oklahoma had poor-to-very poor ratings of 63% and 54%, respectively. At this point, it seems likely that U.S. winter wheat production will be down in 2018, but wheat prices themselves remain under pressure while we have yet to hear much about world wheat production. For now, price trends remain down in all three wheats. DTN's National SRW index closed at $4.21 Monday, near its lowest close in a month and 34 cents below the May contract.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd on Twitter @ToddHultman1

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