DTN Before The Bell Grains

Morning CME Globex Update:

Outside markets are trading in a risk-off fashion in the overnight with Dow futures down 183 points, February crude oil down 68 cents, the U.S. dollar index down 0.0330, and February gold $2.60 higher. The perception of a slowing Chinese and world economy is impacting markets. China exports for December were said to be down 4.4% from last year.

Other Markets:

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

Corn:

No news is bad news again as corn was lower, but now up a bit and hovering just a few cents above the trend line support around $3.75 on March. The absence of any USDA export data for three weeks in a row is a disappointment to the grain and soy markets, which have been trading on rumor since the initial China soybean purchases. There was an uptick in CIF corn values late last week, perhaps an indication that some business is taking place, with basis said to be up 5-6 cents on Friday. In other news, Argentine corn planting is now 86% finished and conditions there, though they could use some net drying, are mostly favorable. Last week, the Buenos Aires exchange raised Argentine corn estimates to 44 million metric tons (mmt) from 42.5 mmt to 43 mmt. Brazil corn was left close to unchanged by CONAB at just over 91 mmt, with USDA at 94.5 mmt in their last estimate. New crop Brazilian corn offers beginning in July are said to be some $30 per metric ton under U.S. values into Asian destinations. China raised their corn production to 257.3 mmt, 1.3 mmt above USDA. It reflects a deficit in production to usage of 26.5 mmt, but that is down from 33 mmt. Rumors have been rampant about China buying U.S. corn, DDGs, ethanol and pork in their pledge to buy U.S., but the trade is growing weary of rumors. There are some corn tenders around with South Korea having bought, and Japan, Malaysia and Turkey tendering for corn. Funds remain net long an estimated 50,000 contracts of corn with options included. Look for resistance on a bounce to be solid at $3.79-$3.80 on March. DTN's National Corn Index closed at $3.46 on Friday, with an average basis of 32 cents under March.

Soybeans:

Soybeans are down as the lack of USDA confirmation of additional soy sales and a slowing Chinese economy weigh on prices. China's exports for December, at down 4.4%, are a poor sign, as is yet another case of African swine fever in a new province, bringing the total now to close to 100 cases. The trade would like to see that additional U.S. demand as new crop Brazilian beans are said to land in China at a discount of $10 per metric ton (mt) for March and into the summer. Brazil soy basis has now fallen to a normal 40 cents over futures versus the 150 to 200 cents over spot futures that we saw when the trade spat first began. The weather is mostly bullish for this week with a hot and dry pattern said to extend for the week in Parana and Mato Grosso along with NE Brazil. That is surely leading to additional crop losses. The extended forecast beyond 8-10 days appears to lean toward a return to normal precipitation. Safras and Mercado came out with perhaps the lowest printed number for the Brazil soy production on Friday, at 115.7 mmt, down close to 4 1/2 mmt from their last estimate. In the continuing discussion of U.S. soybean versus corn planting, soybeans appear to be gaining ground compared to earlier ideas of a sharp drop in soy planting. In some areas, soybean seed sales are said to be well above last year. Funds remain short a net 50,000 contracts of soybeans with options. Look for trend support down around $8.90, with resistance at $9.10-$9.15 on a rally. March soybeans DTN's National Soybean Index closed at $8.19, and reflects an average basis of 91 cents under March.

Wheat:

Wheat is under pressure despite news that the Russian ag minister has restricted Russian wheat exports to 12 mmt for the balance of the crop year to July. Russia has so far exported 23.8 mmt of wheat. U.S. wheat has become much more competitive, but the freight disadvantage to many locations has led to missed opportunity. We don't know for sure, with the lack of USDA data for the past several weeks, but U.S. wheat exports are down some 70 million bushels versus last year. Tenders are plentiful this week. India bought 30,000 mt of Argentine wheat, but Jordan is back in tomorrow for 120,000 mt, and Ethiopia with a late month deadline to buy 400,000 mt. Funds remain net short an estimated 37,000 contracts of Chicago wheat futures and options combined. We received a good blast of moisture for southern Plains wheat areas over the weekend. Soil moisture remains excellent with the recent drought monitor showing no concerns in the U.S. DTN's National HRW index closed at $4.79, and the average basis is at 25 cents under March.

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

Follow Dana on Twitter @mantini_r

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