DTN Before The Bell Grains

Morning CME Globex Update:

The Dow futures are down 194 points, erasing all of Friday's 184-point gain in the Dow Jones average. March crude oil is down $1.02 per barrel, the U.S. dollar index is up 0.0200, and February gold is up 50 cents an ounce.

Other Markets:

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

Corn:

As the U.S. government partial shutdown is set to end temporarily, corn is hovering right around unchanged, awaiting possible news from the renewal of the U.S.-China trade talks, and the expected USDA data release.
While it uncertain as to when the missing export sales information and CFTC data may be released, the general feeling in the trade is that February 8 is the most likely date to release final production, stocks and wheat acres. U.S. corn is likely to be very competitive on world markets still, but Argentine corn is said to hold a slight discount on a FOB basis. There is corn interest around, with Japan, Malaysia, Mexico, Colombia and Egypt all believed to be looking for corn. Cattle on Feed report expected to be out last week will hopefully be forthcoming this week, and expectations are for placements to be up 1 1/2% versus last year, with on feed up 2%, and marketings little changed. Weather in the U.S. is expected to be some of the coldest since the 1990s with very high winds, which will impact transportation and stress livestock. Brazil's weather, despite some beneficial showers in central Brazil, is expected to return to hot and dry, and that will begin to impact the ongoing planting of the safrinha corn crop at some point. South Africa, where corn acres are forecast down 14%, will become a net importer of corn. The drought there continues to crimp production. The corn futures market continues to move in a sideways triangle-type pattern. Short-term resistance on spot March futures will still be $3.82-$3.83 then $3.85, while support continues to be in the $3.76-$3.77 area. On new crop December, the $4.05 to $4.10 range should be one of very strong resistance. Funds remain long an estimated 60,000 contracts of corn including options, while a CFTC update on the actual should be released soon. DTN's National Corn Index closed at $3.50 on Friday, with an average basis of 30 cents under March.

Soybeans:

Following Friday's late day surge in soybeans after news of the government shutdown ending leaked into the market, soybeans are down 4 1/2 at the end of the night session. The trade will be eagerly awaiting any progress from the next round of U.S.-China trade talks, set to begin on Wednesday, along with the release of USDA's pent-up export sales data. Soybean and palm oil continue to underpin the U.S. soy complex and world vegetable oil markets. Palm oil hit a seven-month high, and March bean oil futures are at the highest level since October. The U.S. soy basis firmed up at the Gulf, but the PNW is still searching for bids through May. Brazil has been selling soybeans to China at a sharp discount compared to the U.S. as that harvest expands. Brazil exported a record large 2.5 million metric tons (mmt) of soybeans in January, bested only by their net 3.5 mmt exports of corn. Brazil has put roughly 4-5 mmt of new crop beans into export channels already. Weather in Brazil, after some beneficial showers in central Brazil, is forecast to revert to the hot and dry pattern that has sapped yield potential since early December. Crop losses continue to mount, and the trade appears to be in the 115-117 mmt range, but that could sink further. Weather updates, trade talks and the USDA data release will likely be the price drivers this week. After having broken above the 200-day moving average late Friday, March soybeans are just below that to begin. A rally and close above $9.27 3/4 will be constructive, with the trade sensing plentiful buy stop-loss orders may be lurking above $9.41. Support should be in the $9.10-$9.15 range. Without additional new sales to China, U.S. and world soy fundamentals remain bearish. DTN's National Soybean Index closed at $8.35 and reflects an average basis of 90 cents under March.

Wheat:

Wheat continues to remain firm on rumors of new export business, and U.S. wheat offers being competitive in world markets. As of late Friday, U.S. FOB offers were believed to be at a $10-$12 per metric ton discount compared to Russian offers. The recent rise in HRW basis has made the U.S. less competitive to some destinations. There are multiple wheat tenders to be determined soon, with purchases by Japan, Tunisia and Algeria late last week, and Jordan, Taiwan, Turkey, Ethiopia, Bangladesh, Syria, Colombia and the Philippines also seeking wheat. Demand for U.S. wheat should pick up over the next several months. News of a vessel of U.S. wheat loading for China at the PNW has trade hopes of additional Chinese demand surfacing. Also supportive to wheat values is the recent weakness in the U.S. dollar, and the impending brutal cold spell expected through Thursday which could see temperatures falling to 30 to 40 below zero in the upper Midwest and 20 below possible in other areas of the Midwest, fueling fears of some winterkill damage. A pretty good data dump from USDA of recently rumored new U.S. wheat sales is expected soon. DTN's National HRW index closed at $4.85, and the average basis is at 25 cents under March, firmer.

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

Follow Dana on Twitter @mantini_r

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