DTN Before The Bell Grains

Morning CME Globex Update:

Outside markets are mostly bearish with the Dow futures now down 377 points after Asian and European markets fell overnight. The Dow Jones average had gained 265 points on Monday. February crude oil is down 77 cents and is now under $45 again. The U.S. dollar index is .5580 higher, while February gold, is up $4.80 and is the highest it has been since June 20, 2018. Pressure in equities continues to reflect the perception of a slowing world economy and the continued shutdown of the U.S. government.

Other Markets:

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

Corn:

March corn once again fell to the minor uptrend line drawn from back in September, and again finished just above it. A fall below the trend line near $3.73 would find the next decent support at $3.65 to $3.68. While U.S. corn shipments thus far this year have been 69% higher than last year, last week's total near 36 million bushels (mb) was below the average needed on a weekly basis to achieve the USDA projection. There has been more talk in the markets about China possibly stepping up to buy a significant quantity of U.S. corn or byproducts, but so far, cash markets are not signaling such purchases. Weather in Brazil seems to be on the front burner Wednesday, especially with respect to soybeans, where a hot and dry ridge over key southern Brazil growing areas has impacted maturing crops. The ridge is expected to break down with the possibly of it returning again early next week. U.S. weather is mostly dry except for southern areas from Texas through the Delta and South, where moderate to heavy rains will occur. Corn appears to be more of a follower now, with soybeans likely setting the stage for Wednesday's market. While weather is slightly bullish, outside markets could provide some pressure. Expect a bounce in the $3.78 to $3.80 area, which will be strong resistance on March. DTN's National Corn Index closed at $3.42 on Monday, with an average basis of 33 cents under March, slightly firmer.

Soybeans:

Soybeans were mostly steady to a bit weaker on Monday following last Friday's strong gains, and March remains some 12 cents to 13 cents above the minor uptrend line. Wednesday morning's focus will surely be weather in Brazil, where the hot and dry pattern over Parana, Mato Grosso do Sul and Sao Paulo is stealing yield potential. The ridge that has been in place is expected to dissipate with some beneficial showers, but the ridge could return early next week, and moisture totals are not expected to be enough to prevent some losses. Private estimates of Brazil's soybean production, which was just a few weeks ago, ranged from 122 million metric tons (mmt) to even as high as 130 mmt, are now thought to have fallen near 117 million to 120 mmt, with some low estimates well under that. USDA was at 122 mmt in the last WASDE. In the absence of any government export data regarding sales and flash sales, soybean bulls have little to hang their hats on except for weather. Weather in central Brazil and Argentina remains mostly favorable. Soybean inspections last week left much to be desired, and remain some 42% below a year ago, compared to the USDA projection of a decline of just under 13%. There were 1,109 deliveries against expiring January soybean futures, with only 275 contracts falling into commercial hands (Dreyfus). While weather should be Wednesday's focus, the weak outside markets, and lack of USDA sales reporting could inject some weakness. March soybeans DTN's National Soybean Index closed at $8.00, reflecting an average basis of 95 cents under March.

Wheat:

Wheat fell hard on Monday, with Chicago setting a new recent low by a 1/4 cent at $5.03 on the March. Despite the fact that U.S. wheat, following recent weakness, has become much more competitive in major export destinations, news that Russia would continue their aggressive export stance by subsidizing rail transportation, and fund selling, pressured wheat. There is also talk that the first of the year index fund rebalancing is likely to result in selling wheat and corn and buying soybeans. On a bullish note, there is talk of commercial grain firms canceling wheat receipts and possibly loading them out in the HRW market. Wheat sales and inspections continue to be a bearish force, with U.S. wheat shipments some 13% below year-ago levels so far. Although the wheat market seems to be the one major ag market that is getting oversold, but it does not seem to matter at this point. DTN's National HRW index closed at $4.58, and the average basis is at 31 cents under March, weaker than the previous week.

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

Follow Dana on Twitter @mantini_r

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