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DTN Early Word Grains         03/22 06:03

   Grains Higher on Trade, Flooding

   May corn is up 2 1/2 cents per bushel, May soybeans are unchanged, and May 
K.C. wheat is up 2 3/4 cents.

By Tregg Cronin
DTN Contributing Analyst

6:00 a.m. CME Globex:   May corn is up 2 1/2 cents per bushel, May soybeans are 
unchanged, and May K.C. wheat is up 2 3/4 cents.

CME Globex Recap:   Equity markets are mostly weaker Friday morning, especially 
in Europe after soft economic data in the way of purchasing managers indices in 
Germany and France disappointed. In the U.S., investors are busy recalculating 
what another year to year-and-a-half of easy money means for equity valuations 
after the Federal Reserve indicated it would not be raising interest rates the 
rest of 2019 and only once in 2020. Grains are mostly firmer as we get set to 
close another week of trading. Next week will be dominated by average trade 
guesses in the run-up to the March 29 USDA reports, but we contend the March 1 
stocks data will be of most importance while the acreage guesses will have 
limited value due to the recent flooding. From a demand standpoint, the 
flooding across the Midwest is a bearish feature as water roils logistics and 
extinguishes demand which can't be made up.

OUTSIDE MARKETS:   Previous closes on Thursday showed the Dow Jones Industrial 
Average up 216.84 at 25,962.51 and the S&P 500 up 30.65 at 2,824.23 while the 
10-Year Treasury yield ended at 2.537%. Early Friday, the June DJIA futures are 
down 108 points. Asian markets are higher with Japan's Nikkei 225 up 18.42 
(0.09%) and China's Shanghai Composite up 2.69 points (0.09%). European markets 
are lower with London's FTSE 100 down 68.14 points (-0.93%), Germany's DAX down 
37.68 points (-0.33%) and France's CAC 40 down 46.61 points (-0.87%). The June 
Euro is down 0.004 at 1.140 and the June U.S. dollar index is up 0.133 at 
96.120. The June 30-Year T-Bond is up 22/32nds, while April gold is up $5.00 at 
$1,312.30 and May crude oil is down $0.54 at $59.44. Soybeans on China's Dalian 
Exchange were up 0.06% while soybean meal was up 0.43%.

   

   


   BULL                                     BEAR
1) Corn and wheat export sales hit the   1) Soybean export sales missed the
   needed levels to achieve the USDA        level needed to achieve the USDA
   forecasts last week.                     forecast with total commitments
                                            lagging last year by 17%.
2) Crude oil futures traded over $60 per 2) Minneapolis spot floor trades saw
   barrel this week for the first time      most wheat protein classes ease
   since mid-November, supporting the       from early week values as
   entire energy market including           13.5-15.0% protein is flat at
   ethanol.                                 +180K.
3) Above normal precipitation and below  3) Cash traders continue to point out
   normal temperatures are forecast for     the awful logistics plaguing the
   the Northern Plains in the 6-10 and      ethanol industry which should slow
   8-14 day which will slow dry down.       corn grind rates in the near-term.

MORE COMMODITY-SPECIFIC COMMENTS 

   CORN  Corn futures are firmer Friday morning as December corn pushes back 
above $4.00 for the first time since February 25. Due to stronger corn basis 
where end users desperately need bushels, some areas are paying the highest old 
crop cash corn prices since summer despite relatively flat futures levels. The 
DTN National cash corn index closed Thursday at $3.48, the highest settlement 
since February 22. While these values still aren't bringing about a lot of 
selling, due in large part to the inability to move grain, there should be a 
fair amount of hedge pressure above $4.05 December '19 corn futures. Corn 
export sales last week were decent at 33.7 million bushels (mb) vs. the 26.7 mb 
needed weekly to hit the USDA forecast. Commitments at 1.643 billion bushels 
(bb) are down 7% from a year ago as the 2018/19 crop year should not see the 
same sort of export pull June-August as we did last year. Lots of chatter about 
China moving forward on the purchase of up to 7 million metric tons (mmt) of 
U.S. corn as part of filling their obligation to the World Trade Organization. 
As always, we will wait for the USDA to make confirmations before we decide 
this is finally the missing piece we've been waiting for. Momentum indicators 
are strong and rising, indicating no looming bearish set back.

   SOYBEANS  Soybeans are a bit higher Friday morning, adding to Thursday's 
gains with an eye toward trade negotiations next week. As one financial media 
outlet reports a trade deal is close at hand, another reports Trump has no 
intention of removing tariffs and to strap in for a long, drawn-out affair. 
Volatility remains in a downtrend as there is nothing to get too excited about 
until the end of the month reports are behind us. Soybean export sales last 
week were a bit weaker as commitments only measured 14.7 mb vs. the needed 
weekly level of 16.0 mb. Total commitments are now down 17% from last year 
while the USDA is only forecasting a 13% decline from a year ago. As concerning 
is the fact that exporters have only shipped 55.4% of the USDA's export 
forecast which is the lowest on record for this week on the calendar. Lots and 
lots of work to do on the export front to prevent USDA from making further cuts 
on subsequent WASDE reports.

   WHEAT  Wheat contracts are higher, adding to Thursday's gains as the 
gigantic managed fund short seems to support on days without distraction. 
Technically, wheat export sales did hit the needed level to achieve the USDA's 
export forecast at 11.0 mb vs. 7.7 mb. The trouble has been shipments, however, 
as only 66.1% of the USDA's forecast has been shipped with 11 weeks left in the 
marketing year. That is an all-time record low for any year going back to 1991. 
The poor logistics continue to keep things inconsistent across the Northern 
Plains with additional ethanol plants being shut off and rail remaining 3-4 
weeks behind want dates. We continue to sell large quantities of HRW each week, 
but the ability to actually get the wheat into exportable position will remain 
a challenge well into April. It has seemed lately that each bushel of demand 
HRW is adding, HRS is taking away as poor export sales and shipments continue 
to plague the spring wheat market. As we opined earlier in the week, the HRS 
balance sheet needs to see a massive acreage cut in 2019/20 to prevent ending 
stocks from reach the highest level in 30-years. The switch to above normal 
precipitation and below normal temperatures for the Northern Plains is about 
the worst shift in the forecast spring wheat producers hoped to see.


              DTN Cash   Change From    National      Contract   Change from
Commodity     Index      Prev Day       Avg. Basis    Month      Prev Day
Corn:         $3.48      $0.05          -$0.28        May        $0.000
Soybeans:     $8.23      $0.04          -$0.88        May        -$0.009
SRW Wheat:    $4.40      $0.01          -$0.27        May        -$0.004
HRW Wheat:    $4.32      $0.04          -$0.15        May        $0.008
HRS Wheat:    $5.38      $0.00          -$0.33        May        $0.007

   

   Tregg Cronin can be reached at tmcronin31@gmail.com 

   Tregg can be followed throughout the day on Twitter @5thWave_tcronin 

   


(KR)

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