DTN Before The Bell Grains

Morning CME Globex Update:

Thursday morning brings another lower start, not only to grain prices, but to most commodities with the U.S. government set to increase tariffs on Chinese goods at one minute past midnight. USDA's weekly report showing net sales cancellations in soybeans added more bearish pressure to an already bearish situation.

Other Markets:

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

Corn:

July corn is down 5 1/4 cents early Thursday, partly pressured by chances for drier weather ahead and partly pressured by ongoing trade concerns that aren't getting better at the moment. In the case of corn, not only is China a possible future customer of some corn and ethanol, but trade issues also remain unresolved with Japan and Mexico. Thursday morning's weather map looks drier with rain around the Great Lakes and Indiana and at the Mississippi Delta. Flooding remains an issue in Kansas and eastern Texas, while a winter weather advisory is posted in Nebraska and South Dakota. The seven-day forecast is drier for all but the southeastern Corn Belt with Indiana and Ohio expected to catch more rain. All the above is mentioned to say that there is still a legitimate risk of losing expected corn acres in early 2019, even if market prices are not currently reflecting that risk. Early Thursday, USDA said last week's corn sales and shipments totaled 11.3 million bushels (mb) and 45.4 mb, respectively -- a neutral showing for the week. Technically, cash corn prices are holding in a sideways trading range as the market waits to see how planting will go this month. DTN's National Corn Index closed at $3.39 Wednesday, priced 25 cents below the July contract. In outside markets, Dow Jones futures are trading lower ahead of Friday morning's new tariffs and most commodities are lower. Private exporters reported to the U.S. Department of Agriculture export sales of 107,000 metric tons of corn for delivery to Colombia during the 2018-19 marketing year.

Soybeans:

July soybeans are down 8 cents early with ongoing concerns about the status of trade with China and bearish news in Thursday's export sales numbers. As old as the topic seems, trade with China is still the biggest market factor pressuring soybean prices lower and also potentially the most bullish factor that could help prices if a deal were struck. At the moment, things are not looking so hopeful with the U.S. set to raise tariffs on Chinese goods at one minute past the stroke of midnight. Trade negotiations will be taking place Thursday and Friday and the U.S. is also discussing adding another 25% on an additional $325 billion of Chinese goods. Unless some agreement can be found before this fall, U.S. soybean ending stocks are at risk of going even higher than USDA will estimate on Friday. Fundamentally, Friday's report will repeat USDA's estimate of record ending soybean stocks in 2018-19, a bearish condition that has no solution yet, unless weather is holding a surprise in 2019. Early Thursday, USDA said last week's soybean sales saw net cancellations of 5.5 mb while shipments totaled 22.3 mb, another bearish performance. Technically, both cash and future soybean prices are trending lower while trade talks continue. DTN's National Soybean Index closed at $7.42 Wednesday, still trending lower and priced 85 cents below the July contract. Private exporters reported to the U.S. Department of Agriculture export sales of 369,000 metric tons of soybeans for delivery to unknown destinations.

Wheat:

July Kansas City wheat is trading down 4 1/4 cents early, staying close to the $4 mark while the U.S. winter wheat crop is getting a number of weather challenges. The National Weather Service has issued a winter wheat advisory in Nebraska and South Dakota, a freeze warning in central Nebraska, a flood advisory in Kansas and flash flood watches and warnings around eastern Texas, Arkansas and Louisiana. The seven-day forecast also expects more rain for Indiana and Ohio, two states already dealing with excess moisture. Spring wheat areas in the northwestern Plains will be drier the next seven days, but temperatures are expected to remain cool until Sunday when the 70s come to the Dakotas. Outside North America, early conditions are mostly favorable for major wheat areas in 2019, the main source of bearish pressure for wheat prices. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 3.3 mb and 24.4 mb, another reason wheat exports may not reach USDA's goal by the end of May. For now, the trends in all three U.S. wheat prices are down, but showing early hints of support. DTN's National HRW index closed at $3.88 Wednesday, 16 cents under the July contract and near its lowest prices in a year. DTN's National SRW index closed at $4.12, also up from its lowest prices in a year. May grain futures contracts expire on May 14.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow him on Twitter @ToddHultman

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