DTN Before The Bell Grains

Morning CME Globex Update:

Following Wednesday's 117-point higher close, the Dow futures were once again pointing higher, but now show 7 points lower. March crude oil is up 11 cents, the U.S dollar index is down 0.1800, and April gold is down $1.10 an ounce.

Other Markets:

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

Corn:

Corn futures continue to chop back and forth around the 20 and 50-day moving averages, and close to the pre-report level. The basis continues to be very strong at both the Gulf and the PNW, with part of the strength related to poor weather and logistical issues, but also some ongoing demand. South Korea continues to buy U.S. corn, with a 60,000 metric ton (mt) and a 115,000 mt purchase completed on Wednesday, according to multiple news sources. Rumors of China purchases also continue. China's JCI (trade consultant) came out with their updated supply and demand for China in which they increased feed grain imports by 24 million metric tons (mmt) versus last year. Of that, they suggested that China would import 14.5 mmt of corn versus just 3.5 mmt last year. They also bumped up wheat, sorghum and DDG purchases. Only time will tell if that is close to being accurate. Trade talks in China appear to be on the right track, with Treasury Secretary Steve Mnuchin stating that talks were going very well, and apparently President Trump is mulling over a 60-day extension of the March 1 deadline. South Africa's corn production is pegged at 12.5 mmt compared to last year's 16.8 mmt. Ethanol production rose a hefty 6.4% last week, while ethanol stocks fell by 2%. Funds are now thought to be close to even on corn, including options. Look for the range to continue to be from $3.73 to $3.83 on March corn. Delayed export sales for the week of January 3 were 459,800 mt, and that was down 64% from the previous four-week average. DTN's National Corn Index closed at $3.51 on Wednesday, with an average basis of 28 cents under March, firmer.

Soybeans:

Soybeans are under heavy pressure to begin Thursday as they continue to trade in a narrow range in choppy trade. News from the trade talks is mostly positive with the primary trade representatives to meet Thursday and Friday, with China's President Xi Jinping attending on Friday. China is buying Brazilian news crop beans as we speak, with another 10-15 cargoes rumored to have been bought on Wednesday. With China having bought the 10 mmt of U.S. soybeans that they had promised, it seems that much of the trade talk has centered around potential wheat, corn and other feed ingredients from the U.S. China's January soybean import did jump to 7.38 mmt in January, up 29% from December's 5.72 mmt, but that is still off 13% from last year. China's trade surplus with the U.S. is moving in the right direction, with January's surplus down to $27.3 billion from $29.87 billion in December. NOPA will be out on Friday, with pre-report estimates of crush around 169.6 million bushels (mb) compared to 171.7 (mb) in December. The Rosario Grain Exchange raised Argentine soybean production to 52 mmt from 50 mmt, but they are well under the USDA (55 mmt) and other private analysts' estimates. Weather is much more conducive to improved yields in late-planted beans and safrinha corn, with widespread rain expected throughout Brazil, and a more normal pattern into March. For early soybeans, it is too late, but the crop is stabilizing. Expect March soybeans to continue to see support down near $9.00, and resistance up around $9.20-$9.25. Delayed export sales for the week of January 3, released on Thursday, were a net sales reduction of 612,000 mt, a marketing year low. DTN's National Soybean Index closed at $8.30, and reflects an average basis of 86 cents under March, firmer.

Wheat:

Wheat markets are under pressure, except for Minneapolis, which is just slightly lower. Cold and snowy weather in the PNW and northern Plains have adversely impacted transportation and logistics and the spring wheat basis has been on fire. Another 10-12 days of more snow in the PNW, Plains and Midwest will continue to stifle logistics. The EU is now priced under U.S. HRW at the Gulf, and that is impacting Kansas City futures. There are a host of wheat tenders around, and it remains to be seen if the U.S. can garner some of that business. South Korea is reported to have bought 85,000 mt of U.S. wheat on Wednesday. The JCI S & D reported above also includes China ramping up their wheat purchases to 12 mmt from 6.8 mmt last year. Rumors of U.S. wheat sales to China have floated around for weeks now. Traders will be keeping an eye on some very frigid temperatures February 25 to February 28, and the potential winterkill threat that poses to parts of KS and NE. Delayed export sales for the week of January 3 were 141,200 mt, a marketing year low for wheat. DTN's National HRW index closed at $4.74, and the average basis is at 20 cents under March, firmer.

Dana Mantinican be reached at dana.mantini@dtn.com

FollowDana on Twitter @mantini_r

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