DTN Before The Bell Grains

Morning CME Globex Update:

Dow futures are down 65 points, May crude oil is down 22 cents per barrel, the U.S. dollar index is down 0.1670, and June gold is up $7.70 an ounce.

Other Markets:

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

Corn:

Corn is lower, within a few cents of the contract low set ten days ago, ahead of what is expected to be a bearish USDA report. USDA is expected to cut both feed and residual and possibly corn used for ethanol, raising U.S. ending stocks back up to over 2.0 billion bushels (bb). The only bright spot on the export scene is U.S. corn inspections, with shipments still some 16% above year ago levels, but the pace of exports is slowing steadily as cheaper South American values cut into U.S. corn exports. Last week's corn inspections of 40.8 million bushels (mb) brought the total to 1.209 bb. Argentine corn offers for summer are said to be $25 per metric ton cheaper than U.S. on a FOB basis, while Brazilian corn for July-August is estimated to be $20-$22/metric ton (mt) below U.S. values. South Korean companies are estimated to have bought close to 700,000 mt of optional corn since March, but much of that is likely to originate in South America. Corn production in both South American countries is on the upswing, with the Buenos Aires Grain Exchange the latest to increase the Argentine crop up 3.0 million metric tons (mmt) to 46.0 mmt. That lags the average trade estimate of 46.8 mmt for Tuesday's USDA report, which would be nearly 15.0 mmt above last year's drought impacted crop. Managed money funds are thought to be holding a record net short in corn of nearly 275,000 contracts now. Weather in the U.S. is not conducive to rapid planting, with a major storm system expected to drop snow and heavy rains in the central and northern U.S. and heavy rains look to fall in the already waterlogged Delta and southeast. Corn planting is just 2% done now, in line with the average, but delays are expected. The China ministry of commerce is expected to review the anti-dumping tariffs on U.S. DDGs at the request of U.S. companies. Those tariffs rose to 42-54% in January of 2017, slowing U.S. exports of DDGs to a trickle. DTN's National Corn Index closed at $3.36 on Monday, with an average basis of 24 cents under May.

Soybeans:

Soybeans are little changed in the overnight and remain right at the key $9.00 level ahead of Tuesday's USDA report. That report is expected to reveal a slightly higher U.S. ending stocks number, with the average estimate 913.0 mb, and the already record large world stocks moving one million tons higher to 108.4 mmt as Argentine production is likely to be raised. Trade continues to await any positive news from the U.S.-China trade talks which are continuing this week, but the threat of tariffs on EU imports to the U.S. is not something that the markets need. Export inspections last week of 32 mb brought total shipments to 1.109 bb, 28% below year ago levels. As in corn, South American values are clearly much cheaper and only the removal of tariffs on Chinese soybean imports are likely to give this market a shot at the upside. The cool and wet forecast for the U.S. into late April threatens to add to the soybean bearish supply situation, as corn and/or spring wheat acres could be shifted to more soybeans. Look for May soybean support to be $8.95, with solid resistance up at $9.10-$9.15. DTN's National Soybean Index closed at $8.14, and reflects an average basis of 85 cents under May.

Wheat:

Wheat markets continue to leak lower with Kansas City May now less than 7 cents from the contract low, and Chicago May having breached the 20-day moving average. Winter wheat conditions in the past week improved by 4% to 60% good to excellent, compared to just 30% last year. Hard red winter (HRW) states are said to be even better at 62%, while soft red states improved, but are still the worst conditions in quite some time. Spring wheat planting is called just 1% done, compared to the 5-year average of 5%. That pace is likely to slow even further with blizzard conditions expected to hit parts of South Dakota and Minnesota. Wheat inspections were just 19.8 mb last week, and total shipments are nearly 5% below a year ago. U.S. ending stocks of wheat are likely to rise closer to 1.1 bb, with the average trade estimate for today's USDA report 1.076 bb, as exports could be cut further. Ending stocks of SRW are estimated at 95 mb compared to 160 mb last year, while spring wheat stocks of over 300 mb will be the highest in several years. One positive for wheat is some key Australian wheat areas where dryness is a growing concern ahead of planting. Egypt is said to have rejected a 63,000 mt cargo of French wheat at port due to unacceptable levels of the ergot fungus. Soft wheat area in France for 2019 is estimated to be nearly 3% higher than in 2018, adding to an already large world wheat supply. As in corn and soybeans, managed money funds are carrying a large net short position in both Chicago and Kansas City wheat. DTN's National HRW index closed at $4.18, and the average basis is at 13 cents under May.

Dana Mantini can be reached at dana.mantini@dtn.com

FollowDanaon Twitter@mantini_r

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