DTN Before The Bell Grains

Morning CME Globex Update:

Dow Jones futures are up 85 points, June crude oil is down 58 cents per barrel, the U.S. dollar index is down 0.0690, and June gold is down $3.20 an ounce.

Other Markets:

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

Corn:

Corn is attempting to close higher for the fifth consecutive day after setting new contract lows last week. July is approaching what should be a very strong area of resistance at $3.67-$3.70. After 1/2" to 1 1/2" of rain fell Tuesday in the upper Midwest, more storms are moving across the Corn Belt. A wet and cool forecast is in store Wednesday for the Southern Plains and much of the Midwest, with some snow in the northwest Plains. Heavy rains on the Illinois River have caused major delays in shipping there. The weather forecast for the next 15 days is for above normal precipitation and below normal temps, leading to planting delays for both corn and spring wheat. Some heavy totals of 5-7" are possible in Oklahoma, Missouri and Arkansas, while 2-4" totals are possible in the Eastern Corn Belt. Corn basis is firming as farmer sales have been hard to come by. Although funds have surely covered part of what was a record net-short as of last week, they still remain short an estimated 322,000 contracts of corn now. South America corn values continue to be priced well under the U.S., and Argentina has had a very active month of exports, with 6.9 million metric tons (mmt) of corn said to be shipped so far, as farmers fear the imposition of higher export taxes there. As African swine fever continues to have a devastating effect on China's pork supply, China recently approved pork imports from Argentina and have agreed to increased poultry trade with Russia. U.S.-China trade talks continue and hopes are high for a settlement within a few weeks, but Economic Advisor Larry Kudlow's comments that another $12 billion in farmer aid would be available again was a sign to some that negotiations may extend further. Agriculture Secretary Sonny Perdue remarked that there are no plans for additional aid at this point. DTN's National Corn Index closed at $3.35 on Tuesday, with an average basis of 28 cents under July.

Soybeans:

Old crop soybean futures fell again Tuesday to new contract lows, while new crop November came within eight cents of the low. Soybeans again are approaching new lows in the overnight, and the market is very oversold. A dismal export picture, with sales and shipments still well under a year ago, along with sharply higher South American supplies and new fund selling has resulted in July soybeans falling 65 cents just since April 16. Brazil's soybean basis was down another 10-15 cents to just 22 over the nearby futures, while Argentina is said to be 40 cents under futures and U.S. soybeans more like 40 over spot futures. Funds are now thought to be short over 160,000 contracts of soybeans, a new record if confirmed. Last week's managed money net-short was 134,000 contracts as of last Tuesday. Soybeans are also being pressured by the idea that the longer this cool and wet weather pattern delays both corn and spring wheat seeding, it is likely to add unwanted soy acres to the mix. Census crush is expected Thursday morning with estimates for 179.9 million bushels (mb) for March compared to 170 mb from NOPA. Soybean meal also made new lows Tuesday below the previous support of $300, but the weakness found some end user pricing interest. Argentina has also ramped up both soybean and meal shipments ahead of a possible tax increase, and totals for the month are 2.5 mmt of meal and 1.1 mmt of soybeans, according to Linn Group analysts. Look for July soybeans to find resistance in the $8.60-$8.70 range, but major resistance is nearly forty cents higher. DTN's National Soybean Index closed at $7.65, and reflects an average basis of 90 cents under July.

Wheat:

All three wheat markets fell to new contract lows Tuesday, but so far all three are firmer to start Wednesday. Kansas City July has fallen over 50 cents per bushel just since mid-April. The Wheat Quality Council Tour moves into its second day, with results from the first day glowing after 240 stops in north central, central and western Kansas, and revealing an average yield of 46.9 bushels per acre (bpa) compared to last year's 38.2 bpa the first day. Although yields were far better, maturity of the crop is lagging. The tour also mentioned crops in Oklahoma, Colorado and Nebraska, with the Oklahoma crop said to be 125.35 mb, over 55 mb above last year. Colorado's wheat crop is pegged at 97.2 mb, 27 mb higher than 2018, while Nebraska is slightly lower than 2018 at an estimated 47.4 mb. The wheat basis Tuesday fell ten cents in Kansas City, especially in the higher protein. Saudi Arabia's purchase of 620,000 mt (22.7 mb) of milling wheat on Tuesday was thought to involve some hard red winter (HRW) wheat, but the market action Tuesday sure did not suggest that. Jordan again passed on their tender for 120,000 mt, and Ethiopia is in for at least 600,000 mt (22 mb). More rains are falling in the Southern Plains wheat areas, and some heavy totals are expected in Kansas and Oklahoma, but heavy rains in the eastern soft red winter wheat areas are surely not welcome. Kansas City July wheat will find resistance in the $4.07-$4.10 range. DTN's National HRW index closed at $3.77, and the average basis is at 17 cents under July.

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

FollowDanaon Twitter@mantini_r

(KR)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.