DTN Before The Bell Grains

Morning CME Globex Update:

Dow futures are showing a 215-point gain in the overnight following Friday's 211-point higher close. April crude oil is up 68 cents, the U.S. dollar index is down 0.1280 and April gold is down 30 cents per ounce.

Other Markets:

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

Corn:

After Friday's surprisingly bearish USDA corn report, corn is attempting to recover a bit this morning, but so far is recovering less than a quarter of the 17-cent lower finish. Friday's stocks and seeding report gave us a double-header of bad news, much higher than expected March 1 stocks, and acreage intentions that were not only well above last year, but well above the average pre-report trade estimate. Stocks of 8.6 billion bushels (bb) were 275 million bushels (mb) above the average estimate and well above trade expectations, the likely result of reduced feed, ethanol and maybe even export demand. It is likely that in the April report, USDA will be forced to raise U.S. ending stocks, and we are likely to once again approach the 2 bb mark. On the seeding side, 92.8 million acres was not only 1.5 million over the average estimate, but3.7 million acres higher than last year. Unlike the stocks number, the final acreage number is a moving target as spring flooding could stifle corn planting efforts. The good news is that on the Friday weakness, Asian demand ( specifically South Korean) picked up, with several South Korean feed importers said to have stepped in and bought corn at weaker values. South Korea's MFG, NOFI and FLC were all mentioned as having bought corn on Friday, but so far are unconfirmed on a sales report, and most is likely optional origin. Commodity funds, who came into Friday's USDA report carrying an unusual springtime net shot, added to that with one major commission house who tracks fund activity on a daily basis, saying that funds added another 75,000 contracts to their short on Friday. If correct, they have the combined futures and options position on corn now at a huge 293,000 contracts at contract lows! May corn should find resistance up around $3.66-$3.70 on a further bounce. DTN's National Corn Index closed at $3.30 on Friday, with an average basis of 27 cents under May.

Soybeans:

Friday's soybean report was actually neutral to even slightly bullish, but soybeans, already mired in a bearish price trend, finished lower in sympathy with corn. Monday morning, May soybeans have recovered all of those losses. While March 1 soybean stocks were record large at 2.716 bb, they came in close to the average pre-report estimate, and if anyone were to put credence in the early March acreage intentions of just 84.6 million, the number (which was 1.6 million acres below the average trade estimate and 4.5 million below last year), would be considered bullish. However, spring flooding woes are expected to lean in favor of additional soybean acres. The stocks, which were 606 mb higher than last year at this time, reflects not only reduced China demand from the trade conflict, but also from the ongoing African swine fever, with Chinese soybean meal prices down 17% for the year on reduced demand as their hog herd has taken a huge hit. With the report out of the way, the market will now turn its focus back to the U.S.-China trade talks and South American weather. An article in the Wall Street Journal on the weekend reportedly stated that President Trump is seeking an April settlement to the China trade issue. On Friday, another 816,000 mt (29.9 million bushels) of soybeans were announced sold to China. As in corn, funds added some shorts to their net soybean position, but that position is thought to be short only 95,000 contracts. Look for May soybeans to find resistance on a rally to the old support of $9.00. DTN's National Soybean Index closed at $7.98, and reflects an average basis of 8 cents under May.

Wheat:

Wheat is a mixed bag to begin Monday as Kansas City futures go for the third consecutive lower close. Friday's USDA report was bearish on March 1 stocks, but bullish on acres. The 1.591 bb stocks number was 36 mb above the pre-report estimate, and 96 mb over last year. That suggests that the ultimate U.S. ending stocks number might be headed to the burdensome 1.1 bb mark. Acreage intentions were clearly bullish, with the total of 45.8 million down 1.1 million from the average estimate and 2 million below last year. Of that reduction, spring wheat acres were 600,000 acres under the average estimate at 12.8 million acres. Funds added to wheat shorts on Friday and are thought to hold a 108,000 contract net short in Chicago, including options. Kansas City's net position coming into Friday's trade was record large to begin with. Good news was another sale of HRW to Iraq on Friday, bringing last week's total to 300,000 mt (11 million bushels), with some of that for new crop. Algeria has announced a tender on Monday for 50,000 mt of milling wheat. U.S. wheat shipments, as of last week, were still 4% below a year ago. DTN's National HRW index closed at $4.16, and the average basis is 14 cents under May.

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

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