DTN Before The Bell Grains

Morning CME Globex Update:

Dow Jones futures are 50 points higher, May crude oil is up 38 cents per barrel, the U.S. dollar index is down 0.1460, and June gold is down 60 cents an ounce.

Other Markets:

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

Corn:

Corn is slightly lower to begin after being up a bit early Wednesday, helped by the wheat market following Tuesday's hard down day. May corn is now just three cents above the recent contract low and weekly trend line support. Fund and technical selling in sympathy with a plunging wheat market sent corn down as U.S. export shipments continue to struggle, and South American corn crops continue to grow. South American cash values are much cheaper than U.S. values, and farmers remain undersold in each country. Taiwan feed mill, MFIG, was rumored to have bought 65,000 metric tons (mt) of optional corn on Tuesday from either Brazil or U.S. for June-July, not confirmed yet. Managed money funds are sticking with their very large net-short, thought to be 280,000 contracts. While U.S. exports struggle in the absence of a China trade deal, hopes are pinned on China's increased appetite for pork imports as their own production was down over 5% in the first quarter and expected to fall much more quickly in coming months. A Chinese Ag Minister official projects China pork prices to rise over 70% in the second half of the year. An Iowa State economist projects that China will import from four to six million tons of pork in 2020, but not all of that will be U.S. and likely will require that tariffs be removed. Weather in the U.S., though warmer and drier in the Western and northern Corn Belt, will continue to challenge planting efforts with the saturated Delta and southern Midwest on tap for more heavy rains. On Wednesday, rains are moving across the Western Corn Belt and upper Midwest. Look for May corn to have support from $3.55-$3.57 and resistance up around $3.62-$3.63. DTN's National Corn Index closed at $3.37 on Tuesday, with an average basis of 22 cents under May.

Soybeans:

Soybeans up just a bit early Wednesday are now slightly lower following Tuesday's sharply lower finish. No news continues to be bad news with respect to a China trade solution. Many analysts remain optimistic that a solution is close at hand, but we have heard that for weeks. However, any solution may be too late to make much difference in 2019 with U.S. exports lagging and African swine fever killing demand from the world's largest soy buyer. As in corn, the South American bean supply appears to be getting larger.Funds sold again Tuesday and are now thought to be net-short over 90,000 contracts of soybeans. The low volatility in soybean options suggest that funds are not worried about a major move any time soon. Even with a China announcement, the removal of tariffs is a key component, and it is still likely that U.S. soy carryout finishes at a near 1 billion bushel (bb) number in the face of a record large world supply. May soybeans will now face resistance at the old support of $9.00, while support will be $8.83 to $8.85. China talks continue all week, and the trade is hoping for a positive announcement soon. DTN's National Soybean Index closed at $8.05, and reflects an average basis of 83 cents under May.

Wheat:

Winter wheat markets are bouncing early Wednesday morning, but have recovered less than one third of Tuesday's big losses. Kansas City and Minneapolis wheat both fell to new contract lows Tuesday as slack demand, good moisture headed for hard red winter (HRW) areas, and growing major competitor production ideas overwhelmed the market and fueled more non-commercial selling. Funds added to shorts and remain holding a significant net-short in all three markets. Without a sharp pick-up in U.S. export sales in the next several weeks, the U.S. is likely assured of another burdensome 1.1 bb carryout, and new crop Russian and German wheat crops are pegged to be significantly higher than last year's drought-impacted crops. Russian wheat is expected to recover to 83.4 mmt, up from last year's 71 mmt crop, while German production is being called roughly 20% higher at 24.4 mmt. Recent rains in parts of dry Europe and the Black Sea have improved wheat crops in those areas. While the U.S. missed the recent Egypt business despite being the cheapest on a FOB basis, Gulf hard red winter (HRW) offers are said to be a large discount to Russian wheat in the old crop slot, but Russian wheat is said to hold a $6/mt discount for July-August. A few wheat tenders are in play this week, with Jordan and Ethiopia the primary ones. DTN's National HRW index closed at $4.05, and the average basis is at 12 cents under May.

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

FollowDanaon Twitter@mantini_r

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