DTN Before The Bell Grain Comments

Morning CME Globex Update:

July contracts of all three wheats were starting higher Thursday with ongoing drought helping K.C. pause up 5 1/4 cents at the morning break. May corn and soybeans were slightly lower after USDA said soybean shipments hit a new marketing year low last week.

Other Markets:

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

Corn:

May corn was down a quarter-cent within a narrow, overnight range. Thursday morning's weather map was mostly clear across the Corn Belt with snow still falling in Ohio. High temperatures for the region are in the 40s and 50s which is still too cold for planting, but will turn gradually warmer this weekend. Overall, good planting conditions are slowly getting closer for all but the heavy snow areas of northern Iowa, Minnesota, and Wisconsin. In Brazil, conditions remain favorable for second-crop corn and Brazil's FOB corn price is 15 cents cheaper than in New Orleans, giving the U.S. competition for sales. Early Thursday, USDA said last week's export sales and shipments of corn totaled 43.0 and 63.7 million bushels respectively, a neutral-to-bearish showing that has total corn shipments down 20% in 2017-18 from a year ago. Fundamentally, the outlook for corn remains neutral with a whole growing season still in front. Technically, the trend remains sideways in May corn and up in new-crop corn. DTN's National Corn Index closed at $3.51 Wednesday, down from its highest prices since June 2016 and priced 33 cents below the May contract. Outside markets are mostly quiet with the June U.S. dollar index down 0.07 and other commodities mixed.

Soybeans:

May soybeans were down 3/4 cent early Thursday, holding roughly sideways since mid-February in spite of an escalating trade spat with China, which includes a proposed 25% tariff on U.S. soybeans. The dispute has created a divided market for soybeans in which fundamental conditions are bullish outside the U.S. and neutral inside the U.S. Thanks to China's demand for Brazilian soybeans and Argentina's drought, Brazil's FOB soybean price is staying near its highest level since July 2016 even though Brazil is in the process of finishing a record soybean harvest in early 2018. Here in the U.S., soybean demand has been sluggish and Thursday morning's report saw more of the same. USDA said last week's export sales and shipments of soybeans totaled 38.2 and 14.8 million bushels respectively, a bearish report with a new marketing year low for soybean shipments. So far in 2017-18, shipments are down 13% from a year ago. For now, the trend is sideways in old-crop soybeans and up in new-crop soybeans. Futures spreads continue to show signs of strong commercial buying interest in new-crop contracts, which also happens to be the time of year when China will be most in need of U.S. soybeans. DTN's National Soybean Index closed at $9.71 Wednesday, down from its highest prices in over a year and priced 71 cents below the May contract.

Wheat:

July Chicago wheat was up 2 cents and July K.C. wheat was up 5 1/4 cents early Thursday, still being supported in a sideways range while the southwestern U.S. Plains remains dangerously dry and contends with wildfires. Thursday's U.S. Drought Monitor showed some improvement in the Dakotas, but still has extreme to exceptional drought around the Texas Panhandle and southwestern Kansas. The latest seven-day forecast expects light rain amounts in the southwestern Plains Friday and Saturday, not the broader coverage and heavier amounts that were forecast on Monday. The rain may offer temporary relief from wildfires, but will not offer crops much relief from the stress of drought. Outside the U.S., no significant problems are being reported, but China's wheat region is expecting hot, dry weather the next few days. Fundamentally, U.S. wheat production will be lower in 2018, but may not be noticed globally as supplies are plentiful. Early Thursday, USDA said last week's export sales posted net cancellations of 2.5 million bushels and shipments of 16.6 million bushels, another bearish combination that has total shipments down 11% in 2017-18 from a year ago. New-crop wheat sales are now up to 51.0 million bushels. Technically, the trends remain sideways for all three wheats. DTN's National SRW index closed at $4.45 Wednesday, 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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