DTN Before The Bell Grains

Morning CME Globex Update:

Outside markets are imparting a bearish influence, with the Dow futures off another 120 points following Friday's plunge of 414 points on the Dow Jones average. Crude oil is down 82 cents per barrel, and sub-$45, and now has fallen some $32 since early October. The U.S. dollar index is down 0.2730, and February gold is up $7.50. Equities are being pressured from the partial U.S. government shutdown, which began Friday night due to the border wall funding issue. It is possible that some USDA reports are delayed this week, and into January 2019.

Other Markets:

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

Corn:

Corn, the lone ag bright spot on Friday has given back all of the gains, as the pressure from very weak macro markets has once again resulted in some "any port in a storm"-type selling. Despite some very positive news on the export front, with marketing-year high export sales, the lack of any sort of China announcement on corn has bulls nervous and funds in liquidation mode. There were flash sales of 650,000 metric tons (mt) announced last week, with Mexico continuing to be the primary buyer. Commodity funds as of last Tuesday, according to the CFTC Commitment of Traders report, had bought another 32,000 contracts of corn, and now are estimated to be well over 100,000 contracts long futures, and a combined 50,000 contracts, when including options. The next stop for March corn on the chart appears to be the uptrend line at $3.72, with a fall below that likely more bearish. Trade should be slow on this holiday-shortened trading day, with an early 12:05 p.m. CST close. DTN's National Corn Index closed at $3.44 on Friday, with an average basis of 35 under March.

Soybeans:

Soybeans are reeling again, the victim of outside markets as well as a general disappointment in Chinese soybean purchases. The purchases to date since the G-20 summit agreement, although a step in the right direction, are hardly a balance sheet changer. Also pressuring soybeans is a bearish weather change in South America, which saw weekend rains of up to 2 1/2 inches hit some of the driest areas of the soybean belt. That wetter pattern looks to continue this week, and the overall South American weather outlook is favorable for the next two weeks. Funds are still thought to be net short a combined 52,000 contracts of soybeans, when options are included. Flash sales of soybeans announced last week were 1.775 million metric tons (mmt). China sources are apparently saying that another 2 mmt of soybeans will be purchased by China in coming weeks. Anything less than a total of 5-10 mmt will be a disappointment, and the total is shy of 4 mmt to date. There is another U.S-China meeting scheduled for January, at which time the topics of trade balance and intellectual property issues will be addressed. The U.S. must discourage soybean planting, with the largest carryout in years, and a possible record South American crop on the way, and the falling soy-corn ratio is a step in that direction. Look for some January support to emerge at the uptrend line at about $8.70 on January, $8.84 on March, with a fall under that bearish. Soybeans have now plunged 48 cents from the high made just nine days ago. January soybeans in DTN's National Soybean Index closed at $8.01 and reflects an average basis of 83 cents under January, steadily rising.

Wheat:

Wheat was up a bit this Monday morning, but is starting to fade. A rumor that private Egyptian buyers may have bought some U.S. hard red winter wheat is what has underpinned wheat. Bearish for wheat was the much-anticipated meeting between the Russian ag minister and exporters on Friday. The net effect of that meeting was that no new export restrictions would be forthcoming, and the ag minister's projection of 42 mmt total grain sales compared to earlier estimates of just 38-39 mmt. Wheat exports, expected to now be 37 mmt, compare to earlier expectations of 35 to 36 mmt and a USDA number of 36.5 mmt. There are several more tenders for wheat this week, with Tunisia for soft wheat for February-March, along with Morocco, Japan, Jordan, Syria, Ethiopia, Colombia and Brazil all seeking wheat. Funds in wheat are thought to be net short 38,000 contracts of Chicago and 5,000 contracts of KC wheat on a combined futures and options position. The Buenos Aires Exchange left Argentina's wheat production at 19 mmt, compared to thoughts last week that the crop could fall toward 17 mmt. DTN's National HRW index closed at $4.74, and the average basis is at 29 under March.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow Dana on Twitter @mantini_R

(KR)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.