DTN Before The Bell Grains

Morning CME Globex Update:

Dow futures are showing a gain of 119 points in the overnight following Monday's modest 15-point loss. April crude oil is up $1.02 per barrel, the U.S. dollar index is up 0.1270, and April gold is down $7.10 per ounce.

Other Markets:

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

Corn:

Corn, for the third straight day, is struggling at the key 50-day moving average, but is attempting its fifth consecutive higher close. The market is maintaining gains following last week's announcement of the China corn purchase, and whether a trade solution will lead to additional purchases of U.S. corn and by-products. Last week's export inspections were a respectable 39.2 million bushels (mb), with total shipments up 23% from a year ago, but that pace is slowing and the weekly inspection total was well below the average needed to achieve USDA's projection. As flooding in the U.S. continues to be a major problem, the forecast for the coming month suggests above normal precipitation, and the potential for floods to worsen as snowpack melts in the north. The southeast and Delta are also struggling with a wet pattern. Friday's USDA stocks and seeding report is expected to show a corn stocks number that is some 600 mb lower than last year, but questions remain about the accuracy of acreage survey results due to flooding. Farm Futures came out with their corn acreage estimate of 90.9 million acres compared to USDA's 92 million acres. The big question remains as to how many prevent plant acres we'll see versus last year's 1.9 million acres, which was well under the 5-year average of 3.8 million acres. Managed money funds are still thought to be net short close to 240,000 contracts of corn, down a bit from last week's record large net short, but still a powder keg in the event of a bullish China trade deal. May corn will continue to attempt a solid close above the $3.80 level which may lead to more fund short-covering ahead of Friday's report. The $3.85 area will provide even more resistance, while $4.05 remains a major barrier for new crop December futures. DTN's National Corn Index closed at $3.52 on Monday, with an average basis of 28 cents under May.

Soybeans:

Soybeans continue to struggle, with an overwhelmingly bearish U.S. and world supply and demand profile, and the demand-dampening effects of African swine fever on the world's largest importer of soy. China's February imports of soybeans of just 4.46 million metric tons (mmt), is down 18% from last year. Last week's U.S. soybean inspections of 31.5 mb, shy of the 35 mb per week needed, and brings the total shipments of 1.049 billion bushels (bb) to a level that is still down 30%. Adding insult to injury, Friday's USDA stocks report is expected to reveal March 1 stocks to be up close to 660 mb according to Ag Resource compared to a year ago, and the largest soy stocks on record for this time of year. Also, with the ongoing flooding issues, it is thought that U.S. soy acres could be higher than earlier anticipated. The Farm Futures survey is reflecting soybean acres of 85.9 million acres, down 3.3 million acres, but above USDA's 85 million acres in the last report. Brazil's soybean harvest is approaching the 70% level, and South American values continue to be priced well below U.S. soy, and without a China trade deal, U.S. soy sales may continue to struggle. Managed funds are thought to be net short close to 80,000 contracts of soybeans, but have reduced their net short lately. DTN weather analysts see South American weather as mostly favorable. May soybean resistance will once again be $9.12-$9.15, with the $9.00 area key for support. DTN's National Soybean Index closed at $8.19, and reflects an average basis of 86 cents under May.

Wheat:

Wheat is a mixed bag to start Tuesday, with Chicago and Kansas City higher and Minneapolis under pressure. A temporary loosening up of logistics has resulted in mills backing off, and hard wheat basis falling both in KC and Minneapolis. Last week's U.S. wheat inspections were a paltry 12.5 mb and total shipments remain 6% or 42 mb behind last year. Without a noticeable pick-up in exports, U.S. ending stocks are on a path for 1.1 bb. Good news Tuesday is that Egypt's GASC is back in for April-May wheat and U.S. soft red winter (SRW) may have a shot at least on a FOB basis. However, Egypt's decision to revert to a 180-day payment schedule may lower the amount of and raise price of export offers. Also announced is a large tender by Ethiopia for 600,000 mt of milling wheat from optional origin. Recent news that China had halted imports of Canadian canola has created rumblings of the same for Canadian wheat. Funds remain short a considerable amount of wheat futures, with the Kansas City net short record large as of last week. A few areas of concern for wheat are a notably dry pattern in Europe and expectations for the same in drought-plagued Australia. Here at home, the excessive flooding problems are sure to be compromising some U.S. wheat fields. Wheat futures remain the sole bright spot, with Chicago May now 47 cents above the contract low set on March 11. DTN's National HRW index closed at $4.34, and the average basis is at 16 cents under May.

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

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