DTN Before The Bell Grain Comments

Morning CME Globex Update:

May soybeans were up 3 1/4 cents early Tuesday after China's President said China would do a better job of enforcing the intellectual property rights of foreign firms -- a key U.S. demand for lower tariffs. USDA's WASDE report is due out at 11 a.m. CDT. At 8 a.m. CDT, USDA announced 10.3 million bushels (279,000 mt) of U.S. soybeans were sold to unknown destinations for 2017-18. For 2018-19, 4.85 million bushels (132,000 mt) of soybeans were sold to China and 4.4 million bushels (120,000 mt) were sold to Argentina.

Other Markets:

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

Corn:

May corn was down a penny early Tuesday, trading in a two-cent overnight range while traders wait for USDA's next WASDE report at 11 a.m. CDT. Given the slow demand witnessed in USDA's March Grain Stocks report, the estimate of U.S. ending corn stocks is likely to be increased Tuesday and Dow Jones' survey estimates the new number at 2.19 billion bushels. The survey also expects corn crop estimates for Brazil and Argentina to fall to 92.2 mmt and 33.5 mmt respectively. Brazil's government estimated its corn crop at 88.6 mmt. Late Monday, USDA said 2% of corn was planted, mostly in Texas where 58% of the crop is in. The only planting progress is likely to be in the South for a while as there is still snow on the ground in the northern Plains and the extended forecast calls for more below average temperatures for most of the Corn Belt after a few days of warmer weather. For now, May corn is trading near the upper end of its sideways range and December corn is gradually trending higher. DTN's National Corn Index closed at $3.56 Monday, near its highest prices since June 2016 and priced 35 cents below the May contract. In outside markets, the June U.S. dollar index is down 0.16 and the Dow Jones futures are up 297 points after China's President said he favors lower tariffs and will work to improve enforcement of foreign intellectual property rights.

Soybeans:

At 8 a.m. CDT, USDA announced 10.3 million bushels (279,000 mt) of U.S. soybeans were sold to unknown destinations for 2017-18. For 2018-19, 4.85 million bushels (132,000 mt) of soybeans were sold to China and 4.4 million bushels (120,000 mt) were sold to Argentina. May soybeans were up 3 1/4 cents early Tuesday, a modest, but positive response after China's President Xi Jinping said China would improve its protection of intellectual property rights held by foreign firms. If true, that may be the key to opening talks with the U.S. and lead to a reduction of proposed tariffs, including proposed tariffs on U.S. soybeans. Later Tuesday, traders are apt to see USDA increase its estimate of U.S. ending soybean stocks, from 555 to 570 million bushels if Dow Jones' survey of analysts is correct. The actual number may be higher as U.S. soybean exports have shown no sign of picking up yet. South America's crop estimates will also be watched and Dow Jones expects Brazil's crop estimate to be increased from 113.0 to 115.6 mmt and Argentina's crop to be reduced, from 47.0 to 42.3 mmt. The Brazil estimate is close to the Brazilian government's estimate of 115.0 mmt and Argentina's estimate may even go lower as their crops are in poor shape after a long La Nina-related dry spell. In spite of several bearish concerns for soybean prices, one bullish factor is Brazil's FOB soybean price trading at $11.75 a bushel early Tuesday, its highest in over a year and 39 cents above the FOB price at New Orleans. For now, the trend in May soybeans is sideways while the trend in November soybeans remains up. DTN's National Soybean Index closed at $9.76 Monday, back near its highest prices in over a year and priced 71 cents below the May contract.

Wheat:

May Chicago wheat was down 3 cents and May K.C. wheat was down 5 1/4 cents early Tuesday, easing back after the excitement of Monday's double-digit gains -- gains we don't often see in wheat prices. This year's adverse weather however, has been a persistent problem with the seven-day forecast still showing no significant rain for the southwestern U.S. Plains and snow on the ground in the northern Plains. Late Monday, USDA said 3% of winter wheat was headed and 30% was rated good-to-excellent, down from 32% last week. DTN's Winter Wheat Condition Index dropped from 65 to 50, the lowest score in over twenty years with risk of wildfires still dangerous around western Kansas and the Texas Panhandle. USDA also said 2% of the spring wheat crop was planted, down from 4% a year ago. The only progress came from Washington and Idaho as the rest of the spring wheat region is covered with snow and facing an extended forecast for below average temperatures. With U.S. wheat production threatened by adverse weather in early 2018, the trends for all three wheats are sideways. DTN's National SRW index closed at $4.59 Monday, near its highest prices in eight months and 32 cents below the May contract.

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

FollowTodd on Twitter @ToddHultman1

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