DTN Before The Bell Grains

Morning CME Globex Update:

Dow Jones futures are up 152 points, May crude oil is up 24 cents per barrel, the U.S. dollar index is up 0.046 and June gold is down $8.00 per ounce.

Other Markets:

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

Corn:

Corn is a bit weaker to start, roughly seven cents above the recent contract low set on May futures. Weather appears to have taken a turn overnight to warmer and drier, with NOAA's 6-10 and 8-14 day forecasts indicating a better chance at planting. Corn seeding, at just 3% complete was below most estimates and below the five-year average of 5%. Temperatures are forecast to be above normal for much of the Corn Belt. The southeast and southern Midwest, however, will continue to be challenged with 2-4" of rain expected over the next ten days. Although last week's corn inspections were a decent 46.5 million bushels (mb), and total inspections of 1.257 billion bushels (bb) are higher than last year at 1.106 bb, the pace of shipments is slowing. South American values continue to undercut U.S. offers, with both Brazil and Argentina offered $10 to $13/metric ton (mt) below U.S. Gulf. Funds bought in some of their large net-short on Monday, but remain net-short a huge 285,000 contracts. There is more talk of China's pig losses due to African swine fever, leaving the door open for larger U.S. pork sales into that country. Linn Group states the trade assumes that as many as 150 to 200 million Chinese pigs may have been lost due to the disease. If that is the case, and no one knows for sure, then it could reduce feed demand, especially soymeal, by 8 to 10 million tons. China recently allowed the testing for ASF by large pig farms, a reversal of their earlier ban of the same. May corn will continue to support $3.56-$3.57, and resistance will be solid at $3.66-$3.70. DTN's National Corn Index closed at $3.40 on Monday, with an average basis of 23 cents under May.

Soybeans:

Same story, different day -- May soybeans continue to hover either side of $9.00, awaiting any news from the China trade delegation as talks are ongoing via telephone and video conference this week. Treasury Secretary Mnuchin, who on Monday suggested that negotiations were in the "end game", Tuesday suggested that there is still more work to be done. U.S. soybean shipments last week were a marketing year low 16.9 mb, bringing total inspections to 1.126 bb compared to 1.556 bb last year, with the pace well below the USDA projection. While China's crush demand is expected to take a big hit as their pig herd has been decimated by ASF, U.S. soy meal demand has been very strong and possibly record large. NOPA crush for last week came out at 170 mb, above pre-report estimates. Weather in the central U.S. is more conducive to catching up on planting, with a warmer and drier forecast predicted, though it may be late April and even into May in some areas, which probably suggests less of a switch to soybean acres. South American soybean supplies appear to be growing, with better finishing weather in both Argentina and Brazil, and competition for export business will continue to be fierce. May soybeans will once again find support in the $8.90-$8.95 area, and strong resistance on a rally to $9.10-$9.12. DTN's National Soybean Index closed at $8.15, and reflects an average basis of 84 cents under May.

Wheat:

Wheat is once again under pressure with Kansas City May is now within four cents of the recent contract low. Good crop conditions, good moisture expected for the Southern Plains, and rains expected again for dry areas of the EU and Ukraine are combining to weaken wheat futures. Winter wheat conditions at 60% good to excellent were largely unchanged but the best condition in years, and compare to just 31% good to excellent readings last year. Soft red wheat (SRW) conditions got a bit better as well, although many states remain much worse than last year, such as MI, OH MO and NC. Spring wheat seeding, at just 2% done, lags the five-year average of 13% and will continue to be a challenge, though the forecast is drier as we begin Tuesday. Bearish for wheat is news that German wheat analysts say that production is estimated to be up 20.6% this year to 24.4 million metric tons (mmt), following last year's drought ravaged crop. Sov Econ, a Russian analytical firm, has pegged Russian wheat production to be 83.4 mmt, 3.4 mmt higher than their previous estimate and some 13.4 mmt above last year's crop. There are some wheat tenders around this week with Jordan back in for 120,000 mt and Ethiopia in for 400,000 mt of wheat. Taiwan flour mills are in for 109,000 mt of U.S. wheat also. However, despite the cheapest offer on a FOB basis, U.S. wheat missed all of the 240,000 mt sold to Egypt's GASC by roughly $8-$9 per metric ton. Wheat inspections for the week ended April 11, were a disappointing 18.8 million bushels, and remain close to 5% below year ago totals. DTN's National HRW index closed at $4.15, and the average basis is at 12 cents under May.

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

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