DTN Early Word Grains

Row Crops Firmer, Wheat Weaker Ahead of April WASDE

6:00 a.m. CME Globex:

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

CME Globex Recap:

Global equities are surprisingly buoyant Tuesday morning despite the Trump Administration weighing $11 billion worth of tariffs on the European Union. The EU has promised reciprocal tariffs, escalating trade tension between two regions which scarcely need another conflict as the EU deals with Brexit and the U.S. fights trade wars with China and possibly still Mexico. Otherwise, traders are gearing up for the April WASDE later Tuesday which shouldn't offer anything for bulls as bearish March 1 stocks data and March 29 planting data get incorporated into balance sheets. The next round of major winter weather will hit the Plains and Upper-Midwest Tuesday night into Wednesday morning.


Previous closes on Monday showed the Dow Jones Industrial Average down 83.97 at 26,341.02 and the S&P 500 up 3.03 at 2,892.74 while the 10-Year Treasury yield ended at 2.519%. Early Tuesday, the June DJIA futures are up 5 points. Asian markets are mixed with Japan's Nikkei 225 up 40.94 (0.19%) and China's Shanghai Composite down 5.15 points (-0.16%). European markets are higher with London's FTSE 100 up 9.11 points (0.12%), Germany's DAX up 11.3 points (0.09%) and France's CAC 40 up 12.13 points (0.22%). The June Euro is up 0.001 at 1.130 and the June U.S. dollar index is down 0.105 at 96.545. The June 30-Year T-Bond is up 3/32nds, while June gold is up $4.30 at $1,306.20 and May crude oil is up $0.28 at $64.68. Soybeans on China's Dalian Exchange were down -0.45% while soybean meal was down -0.59%.

1) Large swaths of New South Wales and Queensland in Australia are showing moisture levels in the lowest 1% of the last 10-years as farmers get ready to seed wheat later this month. 1) Corn and wheat export inspections missed the level needed to hit their USDA export forecasts which could lead to cuts on the April WASDE.
2) Spring wheat planting progress was pegged at 1% complete nationally vs. 5% average with no progress made in any of the four largest producing states. 2) Winter wheat conditions improved last week with HRW conditions as of early April at their highest level since 2010.
3) Overnight, crude oil prices traded to their highest spot price since November 2, recovering over 2/3's of the entire Oct-Dec selloff. 3) The Trump Administration is weighing tariffs on $11 billion worth of European Union goods in response to EU subsidies for Airbus.


CORN Corn prices are a tick higher, trying to close higher for the first session in three after price dipped within 3 cents of the March 29 lows. There shouldn't be anything for bulls to sink their teeth into on the April WASDE as carryout estimates should rise for 2018/19 thanks to lower demand. USDA does not issue its first 2019/20 balance sheet estimates until May, forcing the trade to focus on old crop for another month despite the incoming winter storm for the plains and corn belt. Trade estimates suggest the USDA should cut both feed/residual demand as well as their marketing year forecast for ethanol. Reuters reported poor rail logistics are pushing up the price of gasoline on the coasts as stranded ethanol cars remain locked in the Midwest. Gasoline prices in Los Angeles were reportedly closing in on $4.00 per gallon for the first time since 2014. Before Monday, ethanol futures prices closed lower for six straight sessions as areas with ethanol didn't need it, and areas which need ethanol couldn't get it. Corn export inspections of 40.8 million bushels (mb) were below the roughly 42.5 mb needed weekly. Total inspections of 1.209 billion bushels (bb) are still up 15.9% from a year ago, but down from 22.9% two weeks ago. The market is still stating it doesn't need risk premium for late planting.

SOYBEANS Soybean prices are slightly higher, attempting to bounce from Monday's reversal and near-doji close. Overnight, financial media outlets reported the Trump Administration was readying $11 billion worth of tariffs on European Union goods in response to the World Trade Organization findings that the EU provided illegal subsidies to Airbus. The same findings said the U.S. had itself illegally subsidized the production of Boeing aircraft, although this didn't seem to dissuade the Administration from levying tariffs. The U.S hardly needed another trade conflict, especially one with the region which had been helping take up some of the slack in demand from China. As we've seen throughout this administration, agriculture is not usually the top priority and would not appear to be in this situation either. Soybean inspections last week totaled 32.6 mb vs. the 31.3 mb needed each week to hit the USDA forecast. Total inspections of 1.109 bb are down 28.0% from a year ago while USDA is calling for an 11.9% decline. USDA is not expected to adjust 2018/19 soybean carryout on the April WADE, while South American crop estimates could improve slightly from last month.

WHEAT Wheat contracts are mostly lower Tuesday morning, giving back Monday's small gains ahead of the April WASDE and following the better-than-expected crop conditions on Monday afternoon. National winter wheat conditions improved to 60% good/excellent, up four points on the week and sharply better than the 30% good/excellent a year ago. The national winter wheat condition score is at the highest level since 2012 while the HRW condition score is at the highest since 2010. SRW conditions improved last week but remain the lowest for this date since at least 1999. The difference in new crop prospects for these two classes of wheat has Kansas City/Chicago inter-market spreads at contract lows while the spot spread hit the lowest levels since December. All-wheat carryout is expected to rise by 20 mb on the April WASDE due to lower than expected Q3 feed/residual demand. We fear the rise in carryout could be closer to 40-50 mb if USDA comes clean about the horrid state of the export program. As has been the case the last three seasons, 1.0-1.1 bb of old crop stocks is a substantial buffer against any perceived weather threat. All wheat inspections totaled 19.8 mb vs. 26.8 mb needed weekly to hit the USDA forecast. Total inspections are down 4.8% from a year ago while USDA is calling for a 7.1% increase.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.36 -$0.02 -$0.24 May $0.008
Soybeans: $8.14 -$0.01 -$0.85 May -$0.003
SRW Wheat: $4.41 -$0.02 -$0.25 May $0.005
HRW Wheat: $4.18 $0.00 -$0.14 May $0.002
HRS Wheat: $4.90 $0.01 -$0.34 May -$0.002

Tregg Cronin can be reached at tmcronin31@gmail.com

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