DTN Early Word Grains

Grains Mixed Amid Trade Comments, Soft Export Sales

6:00 a.m. CME Globex:

May corn is down 1/2 cents per bushel, May soybeans are up 1 3/4 cents, and May K.C. wheat is up 1/4 cents.

CME Globex Recap:

Stocks are higher around the globe as comments from Chinese state media were viewed as supportive of a trade deal. China's state owned media said Friday "substantive progress" on trade talks is being made while Beijing passed a new foreign investment law designed to smooth a path toward a trade deal with the U.S. Grains are mixedFriday morning as most contracts back and fill, although wheat is looking forward to its first higher close since the last week of January if no abrupt selloff is seen during the session. The massive blizzard that struck the Dakotas and Nebraska mid-week is exacerbating snowpack and flooding challenges and should hamper logistics further in coming days.

OUTSIDE MARKETS:

Previous closes on Thursday showed the Dow Jones Industrial Average up 7.05 at 25,709.94 and the S&P 500 down 2.44 at 2,810.92 while the 10-Year Treasury yield ended at 2.63%. Early Friday, the June DJIA futures are up 93 points. Asian markets are higher with Japan's Nikkei 225 up 163.83 (0.77%) and China's Shanghai Composite up 31.07 points (1.04%). European markets are higher with London's FTSE 100 up 37.44 points (0.52%), Germany's DAX up 38.33 points (0.33%) and France's CAC 40 up 26.04 points (0.49%). The March Euro is up 0.002 at 1.130 and the March U.S. dollar index is down 0.174 at 96.595. The June 30-Year T-Bond is up 3/32nds, while April gold is up $7.60 at $1,302.70 and April crude oil is down $0.03 at $58.58. Soybeans on China's Dalian Exchange were up 0.83% while soybean meal was up 0.47%.

BULL BEAR
1) Morocco is currently sporting the third worst Vegetative Health Index since 2002 thanks to drier than normal conditions the last several months. 1) Weekly export sales of corn at 371,981 metric tons (mt) were the smallest since October 25 as South American competition heats up.
2) Soybean export sales were over four times the needed level last week due almost exclusively to the 1.707 million metric tons (mmt) sold to China. 2) Trade chatter Thursday suggested the meeting between President Trump and President Xi has been postponed until at least April.
3) Spot floor values in Minneapolis and Kansas City were firmer Thursday as awful logistics continue to hamper deliveries. 3) The International Research Institute for Climate and Society has pegged chances for an El Nino pattern at 61-89% through August which would generally be associated with favorable growing weather in the Midwest.

MORE COMMODITY-SPECIFIC COMMENTS

CORN Corn futures are slightly lower Friday morning as the market looks to end what had been a three-day winning streak. Traders were disappointed in last week's export sales as the total was among the two lowest weeks of the marketing year. Net sales totaled 14.6 million bushels (mb), the lowest total for this week since 2013. Commitments as a percent of USDA's forecast at 67.6% are still above last year's 66.6%, but generally below the average level of commitments for this date. New crop corn sales were surprisingly large at 18.6 mb, with total new crop commitments to-date of 69.6 mb the largest for this date since 2015. The blizzard which slammed the Upper-Midwest Wednesday and Thursday will keep late-spring chatter heightened as snow drift and flooding pictures were splashed all over social media. While flooding is likely to get worse as the larger than normal snowpack melts and moves into waterways, it would seem a bit early for us to be cutting corn acreage on March 14. The financial incentive on the futures board and in crop insurance is strong this year, and we've never been able to plant a crop faster than we can in 2019. Encouraging to see corn spreads lifting a shoulder off the mat on the rally with the entire curve moving away from recent lows. Still no confirmation of China buying corn, and the poor logistics in the Northern Plains could make price signals related to such a purchase more difficult to detect.

SOYBEANS Soybeans are firmer Friday morning, although prices are well-inside Thursday's range which featured a sizable reversal lower. Supporting price was China's purchase of soybeans last week, although when digging deeper, sales were not all that positive. Total commitments made last week were 70.2 mb, which was the second largest purchase for this week on record. However, of that total, China accounted for 89%, meaning the rest of the world bought almost nothing. The large Chinese purchases are encouraging, but the lack of diversity in those sales highlights the risk of relying on China to clean up our surplus if trade negotiations hit another stumbling block. One thing worth noting, soybean shipments as a percent of the USDA's forecast are 53.65% which is the smallest on record for this week on the calendar. We need the second largest sales program through August to hit the USDA's forecast, while shipments need to be a new record by 23% over the next largest shipping campaign to achieve the USDA's forecast. Suffices to say, the soybean export program can't take any days off and logistics would do well to improve in coming weeks. NOPA crush on deck Friday with another monthly record expected to be set thanks to the solid crush margins available the entire marketing year.

WHEAT Wheat contracts are mixed but are attempting to notch a higher weekly close for the first time since January. Prices were volatile Thursday as traders couldn't decide whether to focus on the poor export sales report or the record large managed fund position. Global wheat prices are rallying, and end users are stepping forward to extend coverage, so it does feel as though wheat has found a bottom. Export sales last week totaled 9.7 mb which was actually above the 7.9 mb needed weekly, but nothing to write home about. Total commitments of 839.4 mb are 3% above last year while the USDA is calling for a 7.1% increase. Commitments as a percent of the USDA's forecast at 86.9% are the smallest since 2012, but shipments at 64.7% are now right at the levels seen in 2016 and 2017. Traders still talking about the North American Millers' Association production estimate of the 2019/20 wheat crop at 269 mb. Using 20 mb less export demand and unchanged domestic demand, SRW ending stocks in 2019/20 would be expected to fall to 123 mb with their estimate, the smallest since 2013/14. If abandonment is larger than expected, then commercials will probably become anxious to fill available storage, making bullspreads a popular item.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.42 $0.04 -$0.28 May $0.005
Soybeans: $8.12 -$0.02 -$0.87 May $0.005
SRW Wheat: $4.27 $0.06 -$0.25 May $0.002
HRW Wheat: $4.19 $0.01 -$0.17 May $0.010
HRS Wheat: $5.18 $0.01 -$0.34 May -$0.005

Tregg Cronin can be reached at tmcronin31@gmail.com

Tregg can be followed throughout the day on Twitter @5thWave_tcronin

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