DTN Before The Bell Grains

Morning CME Globex Update:

Dow futures are down just slightly to begin, after Monday's 330-point gain on the heels of a bullish Chinese economic report. May crude oil is up 19 cents per barrel, the U.S. dollar index is up 0.0310 and April gold is down 60 cents per ounce.

Other Markets:

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

Corn:

Corn is quiet in the overnight following Monday's recovery from Friday's price plunge. Friday's USDA March 1 stocks report detailed a much higher than expected U.S. corn stocks number than the trade had estimated, leading to speculation of a move toward a two-billion bushel (bb) ending stocks number. Funds, who had added to what is now a record large net short in corn on Friday, were credited with buying back an estimated 17,000 contracts of corn on Monday. Last week's export inspections were an impressive 49.6 million bushels (mb), which exceeded the weekly amount needed, and even thought the total shipments of 1.168 bb is 21% above last year, the pace of shipments is slowing. Last week's 92.8 million acre intentions for corn planting exceeded expectations, but a last half April forecast for above normal rains could delay corn seeding in the face of severe Midwest flooding. The Iowa Farm Service Association flew over IA flooded farmland areas and determined that some 416,000 acres were flooded in six counties, and it was determined that there are no laws to cover lost grain in storage. There are no corn seeding estimates available yet, but Monday's crop progress report said that TX had planted 43% of its grain sorghum, and that compares to a 31% 5-year average. The trade is hoping that last week's purchase of 300,000 metric tons (mt) of U.S. corn is just the beginning, but so far, we have seen no additional interest. The U.S.-China trade negotiations begin again in the U.S. on Wednesday, and a New York Times article reportedly said that both sides are "90% there". Look for May corn to encounter solid resistance on a rally to $3.66-$3.70. DTN's National Corn Index closed at $3.36 on Monday, with an average basis of 26 cents under May.

Soybeans:

As expected, May soybeans ran into selling near the $9.00 level in the overnight, trying to add to solid gains on Monday. USDA reported that China had bought an additional 828,000 mt of U.S. soybeans on Monday, bringing the two-day total to over 1.6 mmt (60.4 mb). Ag Resource suggested that on Monday, China was back seeking offers for U.S. new crop soybeans. Soybean export inspections last week, at 26.9 mb, were once again below the weekly amount needed, and total shipments of 1.076 bb are now down 449 mb, or 29% versus last year. Monday's strong rally was partly attributed to macroeconomic data, with China's manufacturing PMI (purchasing managers index) of 50.8 well above expectations and the previous month and signaling an improving China economic environment. That is typically bullish for raw material imports. The managed money funds, thought to be short close to 95,000 contracts of soybeans to begin Monday, were estimated to have covered 9,000 contracts of that short on Monday. The updated wet forecast for the Central U.S. into the end of April suggests that perhaps soybean acres were underestimated on Friday's report at 84.6 million acres. Trade will focus on any news this week from the renewed U.S.-China trade talks on Wednesday. Look for the $9.00 to $9.05 area on May soybeans to once again be resistance, with more selling likely in the $9.10-$9.15 range. DTN's National Soybean Index closed at $8.09, and reflects an average basis of 86 cents under May.

Wheat:

While Chicago wheat futures remain over thirty cents above contract lows, Kansas City spot futures are lower again, and within a dime of contract lows. Last week's paltry 15.4 mb inspected for export fell below the weekly amount needed to reach USDA's projection, and total inspections are now 691 mb, 41 mb or 6% below a year ago at this time. Even with the recent 300,000 mt of HRW sales to Iraq, exports are still lagging. Winter wheat conditions, reported in Monday's crop progress report signaled a 56% overall good to excellent rating, and that compares to just 32% last year, and is reported to be the highest in three years. Some key states, such as KS, NE, OK and TX featured much better conditions, with OK at 69% good to excellent. Soft red growing states were much the opposite, with the SRW conditions reported to be the lowest in many years. Much of this is no doubt due to excessively wet conditions and the wetter last half April forecast is probably not what is desired. In all areas, soil moisture readings are much improved from previous years, and drought is non-existent. Commodity funds remain short a large wheat position in Chicago and still close to a record net short in Kansas City wheat futures. DTN's National HRW index closed at $4.21, and the average basis is at 13 cents under May.

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

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