DTN Before The Bell Grains

Morning CME Globex Update:

Dow futures are pointing 40 points higher, May crude oil is up 10 cents per barrel, the U.S. dollar index is up .2310, and June gold is down $7.60 an ounce.

Other Markets:

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

Corn:

Corn is down slightly Tuesday morning after setting new contract lows on Monday in both old- and new-crop futures, as weather has favored rapid planting progress this week. On Tuesday, again the radar is pretty clear except for the Southern Plains wheat areas where beneficial rain is falling. In Monday's Crop Progress report, corn planting was recorded at 6% complete, about half of the five-year average. Corn export inspections last week were a surprisingly large 53.3 million bushels (mb) -- above the 51.2 mb needed each week to reach USDA's projection. Total inspections of 1310.1 mb, are up nearly 12% from last year. However, that did not stop commodity funds from selling again and adding to an already record net-short position in corn -- an unusual bet ahead of the North American growing season. Funds were estimated to have sold another 12,000 contracts on Monday, putting them short a record 322,000 contracts (1.6 billion bushels). Funds are now thought to be short a record combined position in wheat, corn and soybeans of close to 500,000 contracts, including Kansas City. Huge South American corn crops and cheaper prices have stifled U.S. corn export business of late, and even though shipments were large last week, the pace of sales and shipments has been slowing. Both in the U.S. and in South America, the farmer has been undersold, as the trade awaits a China trade pact. An organization called the Starch Industry Association has projected that China's corn imports in 2019 are set to increase significantly, as consumption outpaces production there. China is expected to use 260,000 metric tons (mt) of corn in 2019. May corn should have resistance at the $3.56 to $3.57 area now, and we could see a run toward the $3.40 area, but the large fund short will be a bullish input in the event of a China settlement. DTN's National Corn Index closed at $3.34 on Monday, with an average basis of 21 cents under May.

Soybeans:

Soybeans are slightly weaker Tuesday morning and sitting at five-month lows. As in corn, but to a lesser extent, managed money funds have increased bearish bets, with the net-short soybean position now likely over 100,000 contracts. Unlike corn shipments, soybean inspections made another marketing-year low last week at just 14 mb, and total shipments are now down 28% versus a year ago. Inspections need to average over 36 mb per week to reach USDA's projection. Large South American crops, with Brazil nearly done with harvest and Argentina more than one third done, have resulted in much cheaper offers from that area. Old- and new-crop soybean futures have now fallen 32 cent to 33 cents per bushel just since April 4. U.S. trade representatives will meet in Beijing next week, and another meeting in Washington will follow, with expectations for an early May signing of a U.S.-China agreement. We shall see. China has still not completed the balance of the second 10 million metric tons (mmt) of U.S. soybeans that they had promised to buy. Soybean planting is just 1% done -- just slightly under the 2% five-year average, as farmers are intent on playing catch up on corn and spring wheat seeding. As in corn, soybeans are now getting oversold on the charts. DTN's National Soybean Index closed at $7.95, and reflects an average basis of 82 cents under May.

Wheat:

Wheat is getting a modest bounce on Tuesday morning following the new contract lows on Monday in both Kansas City and Minneapolis. Cheaper Black Sea values set the stage for Monday's weakness as aggressive selling by major export competitors continues to undercut U.S. wheat business. Last week's export inspections were a marketing-year high 29.8 mb, but total shipments remain 4% lower than a year ago. After the close on Monday, winter wheat conditions were revealed at 62% good to excellent -- up 2 percentage points versus a week ago and compared to just 31% last year. Moderate to heavy rains are moving across Oklahoma and Texas Tuesday morning, and that will help hard red winter (HRW) conditions, which are now the highest since 2010. Even soft red (SRW) conditions improved, but remain the worst since 2007. Spring wheat plantings, at just 5% are well behind the 22% average pace, but much fieldwork is expected this week. Managed funds remain short a significant wheat position, with Kansas City called a record 54,000 contracts short. Stats Canada is expected to be out on Wednesday morning, and all wheat acres are estimated to be 24.8 million acres, which would be just slightly above last year. With both the EU and Black Sea wheat production expected to surge in 2019, U.S. wheat will continue to be challenged on the export front, despite SRW offers that are said to be the cheapest in the world in the old-crop slot on a FOB basis. DTN's National HRW index closed at $3.99, and the average basis is at 13 cents under May.

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

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