DTN Before The Bell Grain Comments

Morning CME Globex Update:

May and July contracts of corn, soybeans, and all three wheats were higher early Wednesday with K.C. wheat leading the way after strong winds hit eastern Colorado Tuesday, adding to wildfire problems. Most outside commodities are also starting higher.

Other Markets:

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

Corn:

May corn was up 2 1/4 cents early Wednesday while snow moves eastward, across the Dakotas and northeastern Nebraska into northern Iowa where a winter storm warning is in effect. Wednesday's high temperatures will stay below 50 degrees for most of the Corn Belt and increase only gradually toward a warmer looking extended forecast. The central and eastern regions of the Corn Belt are slowly getting closer to better planting conditions, but it will be a while before the northern states get out from under their snow. Brazil's second corn crop is doing well with light to moderate showers expected in central Brazil this week. While there remains some concern about U.S. corn planting in 2018, it is too early to start cutting planting estimates and, for that reason, the fundamental outlook for corn remains neutral. Technically, the trend in May corn remains sideways and the trend in new-crop corn is up. DTN's National Corn Index closed at $3.47 Tuesday, down from its highest prices since June 2016 and priced 33 cents below the May contract. In outside markets, the June U.S. dollar index is up 0.01 and most commodities are higher early. May crude oil is up $1.14 after Tuesday's API inventory was less than expected.

Soybeans:

May soybeans were up 6 cents early, still holding roughly steady in spite of the ongoing trade dispute with China. China's proposed 25% tariff on U.S. soybeans is still on the table, but the big question will be "how long will China be willing to avoid U.S. soybean purchases?" Brazil's FOB soybean price of $11.78 a bushel is 41 cents over the equivalent price in New Orleans and points to a lack of available supply in Brazil, in spite of this year's record 115.0 mmt (4.23 bb) harvest. China's options have been limited by this year's drought in Argentina and China may find itself in a pinch this fall, depending on trade relations with the U.S. and on how the U.S. harvest goes. As usual, much will depend on weather and, in that regard, soil moisture is generally favorable across the Midwest. The eventual size of this year's soybean planting will depend in part on how corn's planting season goes. Fundamentally, the outlook for soybean prices is bullish outside the U.S. and neutral inside the U.S. where demand continues to struggle without China's full participation. For now, the trend in old-crop soybeans is sideways and up in new-crop soybeans with signs of strong commercial buying interest in future spreads. DTN's National Soybean Index closed at $9.75 Monday, down from its highest prices in over a year and priced 71 cents below the May contract.

Wheat:

July Chicago wheat was up 5 1/2 cents and July K.C. wheat was up 7 3/4 cents early after eastern Colorado got hit with strong winds on Tuesday, adding to wildfire destruction in the region. Winds are expected to be tamer Wednesday, but red flag warnings are still seen around the Texas Panhandle. Light to moderate showers are expected in the southwestern Plains on Friday through Sunday, but forecast amounts are shrinking as we get closer to Friday. Temperatures the next five days will not be as hot as Tuesday's 90s in West Texas, but wind continues to be a drying factor for winter wheat. While U.S. conditions remain hostile to winter wheat production in early 2018, other wheat regions outside the U.S. are doing well so far and that is keeping a lid on prices. Fundamentally, wheat continues to contend with heavy U.S. and world supplies. Technically, the trends remain sideways for all three wheats. DTN's National SRW index closed at $4.36 Tuesday, down from its highest prices in eight months and 31 cents below the May contract.

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

FollowTodd on Twitter @ToddHultman1

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