DTN Before The Bell Grains

Morning CME Globex Update:

The Dow Jones futures are off 148 points after Friday's Dow Jones average rally of 336 points. February crude oil is down 99 cents per barrel. The U.S. dollar index is up 0.1130, and February gold is down 70 cents. World equities markets are mostly lower on news of China's lowest GDP growth in many years, and the continued partial shutdown of the U.S. government.

Other Markets:

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

Corn:

Corn is little changed to begin Tuesday, having bounced from two cents lower in the overnight. U.S. corn has been well positioned for new export business as U.S. values are said to be the cheapest feed grain in the world for the fifth consecutive week. However, with Argentine corn crop projections on the rise, that advantage may not last long. The CIF corn Gulf basis was stronger late last week, perhaps an indication of new business. With the spread of African swine fever in China, the world's top pork producer may have to import much more in the way of pork and pork products this year. Also bullish is the fact that the EU is on pace to break last year's record maize/corn imports of 18 million metric tons (mmt) due to drought. While the Ukraine has supplied much of that need, it is a bullish input for world corn trade. The weather in Brazil, where the overall pattern of hot and dry is expected to return after weekend rains, it is beginning to become a factor in corn planting. The Friday rumor that China had proposed to buy $1 Trillion of U.S. products over six years to slash the U.S.-China trade imbalance also helped to support the corn market. Look for the $3.84-$3.85 area to be resistance on March corn, while the $3.76-$3.77 area will be the first support. DTN's National Corn Index closed at $3.49 on Friday, with an average basis of 32 cents under March.

Soybeans:

After having rallied some 28 cents from the low in the past three trading sessions, March soybeans are just slightly higher to begin Tuesday. China's lowest GDP reported in nearly 30 years was not bullish for the soy complex, but was pretty much expected. Unlike wheat or corn, the soybean basis at both the Gulf and the PNW does not hint at additional business occurring. At both ports, sellers were looking for bids late last week. Argentine and Brazilian soybean offers are both said to be cheaper than U.S. FOB offers currently. The U.S. and China trade delegates are scheduled to meet just eight days from today to resume discussions. Supportive to soybeans is that China allegedly offered a path over six years to reduce the trade imbalance with the U.S. Weather in Brazil continues to be front and center. After some weekend relief, which was said to hit some 70% of soy areas, with only 30% of the areas getting an inch or more, the forecast looks hot and dry again, especially in Parana, Mato Grosso and the Northeast portion of Brazil. Pod-filling beans are sure to suffer more yield losses. China soybean meal is said to have hit a new low futures price, fueled by the expanding African swine fever. For March soybeans, look for $9.25-$9.27 to provide resistance on a rally, with $9.05-$9.10 to be first support on a break. DTN's National Soybean Index closed at $8.24, and reflects an average basis of 93 cents under March, weaker.

Wheat:

The wheat market rallied again Friday with Kansas City March popping about 20 cents in the past two trading sessions as rumors of new HRW business permeated the news wires on Friday. The Kansas City HRW spot spread hinted at new business being consummated; that spread has now narrowed some 3 cents in the past three trading days. The rumor, which appeared to be supported by cash HRW activity, was that as many as five-seven cargoes of HRW may have been sold to private Egyptian millers. There is also some talk of additional Algerian business. Of course, with no USDA reporting, there is no official confirmation. Also bullish for wheat is the news that Russia is planning to regulate cash grain prices, perhaps a sign of tightening stocks, and news that Ukraine has already exported some 83% of their planned wheat sales. They have exported some 11.4 mmt, with just 4.6 mmt to go before June 30th. Syria is in for another 200,000 mt of wheat, with a mid-February deadline. Their last purchase in January was supplied by Russia. Wheat continues to rally, and where there is smoke, there sure seems to be some fire. DTN's National HRW index closed at $4.76, and the average basis is at 30 cents under March, weaker.

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

Follow Dana on Twitter @mantini_r

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