DTN Before The Bell Grains

Morning CME Globex Update:

After Thursday's 103-point loss in the Dow Industrial average, Dow futures are showing a gain of 83 points early Friday. April crude oil is up 72 cents per barrel, the U.S. dollar index is up 0.0010, and April gold is up $4.00 an ounce.

Other Markets:

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

Corn:

Corn rallied on Thursday as more talk about China buying U.S. corn once an agreement is signed led commodity funds to buy in some of their shorts. Corn is a bit higher to start early Friday. Talk that China would sign an agreement to buy an "additional" $30 billion of U.S. ag goods supported all of the grain and soy markets. An additional $30 billion would theoretically bring total purchases to near $50 billion, a tall task. The corn basis continues to improve at the ports, but may be more about freight than actual demand. The CIF corn basis at the Gulf is said to be the highest since 2014. On another positive note, there is much talk of China removing tariffs on U.S. DDGs, which took effect in 2017. On Thursday, consulting firm Agro Consult in Brazil, raised that corn crop to 95.6 million metric tons (mmt) versus USDA's 94.5 mmt, and some other private forecasts of 91-93 mmt. Ethanol production was again a disappointment, with production down 33,000 barrels per day, and stocks rising by a hefty 447,000 barrels. The USDA Outlook Forum gave us a look at their ideas for 2019/2020, pegging corn acres at 92 million acres (up 2.9 million acres), with yield at 176 bushels per acre (bpa) and production at 14.89 billion bushels (bb)(versus 14.420 bb this past year), with an ending stocks number of 1.65 bb versus 1.735 bb this year. Corn for ethanol is projected at 5.575 bb, feed and residual is up 125 mb to 5.5 bb and exports at 2.475 bb. USDA released combined export sales for six weeks to February 14, and corn sales were 238.4 mb for 18/19, total commitments are up 2% versus last year, and weekly shipments, at 217.2 mb puts total shipments at 50% above year ago. This is considered a neutral report for corn. March corn support will be at $3.70-$3.71 and resistance up around $3.80. DTN's National Corn Index closed at $3.49 on Thursday, with an average basis of 26 cents under March.

Soybeans:

Soybeans had a strong day Thursday as more rumors of China's buying plans were talked about. Weather in Brazil has certainly turned more crop friendly, but some of the damage had already been done. Ongoing rains will likely help the 15-20% of the crop that was planted later. Agro Consult was the latest to update Brazil soy production, and their 116.4 mmt is just shy of USDA's latest, and probably just above the trade average estimate. Argentina's soy crop has been growing under mostly favorable conditions, but dryness in the past few weeks is beginning to take a toll, with that portion of the crop rated good to excellent falling from 54% to 45% this week. The USDA Outlook Forum revealed their 2019/2020 estimates, and soy planting is 85 million acres, down a hefty 4.2 million acres, with yield at 49.5 bpa versus 51.6 bpa this past year, and a crop of 4.175 bb versus 4.544 bb in 2018/2019. Ending stocks fall to 845 mb from 910 mb this year. Crush is being called 2.235 bb, up 18 mb, and exports 2.025 bb, up 150 mb. USDA combined export sales to the week of February 14 were 240 mb for 2018/2019, with total commitments at 1.356 bb, now 17% lower than a year ago, and shipments at 205.4 mb, make that total now 36% lower than a year ago. Expect March soybean support to be in the $9.00-$9.05 range, with resistance up around $9.20-$9.25. DTN's National Soybean Index closed at $8.26, and reflects an average basis of 85 cents under March.

Wheat:

Wheat also rallied Thursday, closing 5 1/2 cents higher on Kansas City March, but remains only 6 cents above the contract low. Constant rumors of China buying U.S. wheat have made the rounds. U.S. wheat remains competitive in world markets, however aggressive EU and Black Sea selling and a freight advantage has hurt already weak U.S. exports. The USDA Outlook Forum pegs the 2019-2020 wheat crop at 1.9 bb, with acreage down 800,000 bushels to 47 mb, and a yield of 47.8 bpa, up 0.2 bpa. Domestic usage is called 1.133 bb, up 20 mb, but more than offset by the 25 mb decline in exports to 975 mb. There appears to be more talk of the flood potential this spring in the upper Midwest and northern Plains as the heavy snowpack, and more expected over the next two weeks, begins to melt. This could seriously delay spring planting. USDA combined export sales for the six weeks ending February 14 were 131.4 mb, bringing the total commitments to 789 mb and equal to last year, considered bullish for wheat. Weekly shipments of 93.3 mb puts the total at down 10% versus last year. Kansas City wheat has been beat up of late, but on a rally, Kansas City March won't encounter any major resistance until $4.80-$4.85. DTN's National HRW index closed at $4.36, and the average basis is at 19 cents under March.

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

FollowDana on Twitter @mantini_r

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