DTN Before The Bell Grains

Morning CME Globex Update:

With trading in U.S. grain futures set to resume at 8:30 a.m. CST, no big price moves are expected this holiday week, but at least outside markets are looking more supportive for grains early Wednesday. Dow Jones futures, gold and crude oil are all starting modestly higher.

Other Markets:

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

Corn:

March corn ended down 3/4 cent at $3.77 3/4 on low volume Monday and we don't expect a lot of price movement this week between Christmas and New Year's Day. The federal government remains in a partial shutdown and we will watch to see if USDA releases its weekly grain inspections report and if the Energy Department releases its report of ethanol inventory on Wednesday. In South America, crop conditions remain favorable overall with light-to-moderate rains expected in the week ahead after a recent time of hot and dry conditions in southern Brazil. Here in the U.S., moderate to heavy precipitation is expected to move eastward across the central Plains the next few days. For now, the trend in cash corn prices remain up, supported by active exports and in spite of concerns about bearish profit margins in the ethanol industry. DTN's National Corn Index closed at $3.43 Monday, down from its highest price in six months and priced 35 cents below the March contract. Outside markets are looking supportive for grain prices early with the Dow Jones futures up 122 points, February gold up $6.10 and February crude oil up 35 cents.

Soybeans:

March soybeans were also down 3/4 cent on low volume Monday, ending at $8.97. Like corn, soybeans may not trade much this week, but because it is difficult to assess where trade negotiations stand with China, there is always a sense another surprise could be around the corner. As things currently stand, the U.S. is facing the possibility of over a billion bushels of ending soybean stocks in 2018-19, and so far, Brazil is anticipating another record soybean crop in early 2019. As bearish as the outlook is, there is still a chance that China could buy more soybeans and Brazil's crops aren't finished yet. The most bullish news for soybeans of course, would be a trade agreement with China and the uncertainty is keeping noncommercials uncommitted to either side of the market. For now, the trend in cash soybeans is up, but unable to trade above its July high of $8.41. DTN's National Soybean Index closed at $8.00 Monday, down from its highest level in four months and priced $0.84 below the January contract.

Wheat:

March K.C. wheat ended down a quarter-cent at $5.02 1/2 Monday, also on light pre-holiday trade. After experiencing higher levels in early August related to dry weather and reduced production in Europe, HRW wheat prices have fallen back as Russia has gained much of the export attention. There is some bearish disappointment that Russia's meeting last Friday ended with no mention of curbing exports and there is a risk of U.S. ending wheat stocks coming in above a billion bushels in 2018-19. A mix of rain and snow are headed to the southwestern U.S. Plains the next few days, which should benefit crops, but could disrupt travel. Fundamentally, U.S. wheat prices are lacking a bullish argument during what is typically a quieter time of year for trading. For now, the trends in cash HRW and HRS wheat are sideways, while the trend in cash SRW wheat remains up. DTN's National HRW index closed at $4.73 Monday, down from a three-month high and 30 cents below the March contract. DTN's National SRW index closed at $4.85 Monday, down from its four-month high.

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

Follow him on Twitter @ToddHultman

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