DTN Early Word Grains
It Must Have Rained Somewhere
May corn was fractionally lower, May soybeans were 10 cents lower, and July Kansas City (HRW) wheat was 5 cents lower.
CME Globex Recap:Wheat and soybeans are acting like their respective droughts in the U.S. Southern Plains and Argentina have been broken early Friday. Both are showing losses, with old-crop soybeans down about a dime. Corn is doing what corn does, sitting fractionally lower to start the day. Outside markets find DJIA futures rallying again and the U.S. dollar stronger. Meanwhile, the energy complex rallied and metals were mostly lower.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 93.85 points (0.4%) higher at 24,895.21, the NASDAQ Composite gained 31.30 points (0.4%) to 7,427.95, and the S&P 500 added 12.17 points (0.4%) to 2,738.97 Thursday. DJIA futures were 23 points higher early Friday morning. Asian markets closed mostly higher with Japan's Nikkei 225 up 101.13 points (0.5%), Hong Kong's Hang Seng gaining 341.69 points (1.1%), and China's Shanghai Composite adding 18.76 points (0.6%). European markets were trading mixed with London's FTSE 100 up 1.46 points, Germany's DAX down 46.09 points (0.4%), and France's CAC 40 up 3.92 points. The euro was 0.0018 lower at 1.2295 while the U.S. dollar index gained 0.15 to 90.27. March 30-year T-Bonds were 7/32 lower at 144'12 while April gold dipped $1.40 to $1,320.30. Crude oil was $0.45 higher at $60.47 as Brent crude rallied $0.55 to $64.16. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.
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| BULL | BEAR | ||
| 1) | USDA decreased domestic ending stocks of corn more than expected in its March reports, due in large part to increased export demand. | 1) | Spillover selling from soybeans could pressure the corn market early Friday. |
| 2) | It still hasn't rained in Argentina, with that country's soybean crop thought to be well below the 47 mmt USDA projected. | 2) | USDA increased its projection for domestic soybean ending stocks to 555 mb, possibly the largest monthly projection on record. |
| 3) | New-crop winter wheat, particularly HRW, remains in a bullish weather situation. | 3) | U.S. and world ending stocks of wheat are expected to continue to grow larger. |
The weekly Newsom on the Market column can be found on subscription sites only. On DTN Pro it is in News/Town Hall and on MyDTN in News/Columns.
MORE COMMODITY-SPECIFIC COMMENTSCORN The bottom line for corn, regardless of whether one believes USDA's latest supply and demand numbers or not, is that both futures and futures spreads are trending up. This means that support is coming from both noncommercial (futures) and commercial (futures spreads) traders. Old-crop May has cleared technical resistance on its weekly chart near $3.92 and could not challenge its next target near $4.01. New-crop December's weekly chart shows next resistance at $4.10 1/4. The more impressive moves, though, are in the futures spreads where both old-crop May-to-July and new-crop December-to-March have trimmed their respective carries substantially. Unless both groups (commercial, noncommercial) move to the sidelines Friday it would not be surprising to see the market close higher. Delivery of one contract was reported against the March issue, putting the total at 1,059 contracts.
SOYBEANS As discussed in this space Thursday, both old-crop May and new-crop November futures contracts have rolled over into short-term downtrends on their respective daily charts. Overnight trade saw selling interest increase, pushing May to a double-digit loss with November not far behind. Fundamentally it seems nobody really cares about USDA's latest domestic ending stocks projection of 555 mb, possibly the largest on record. Attention remains firmly on Argentina with most of the opinion that USDA's production projection of 47 mmt is still too high. Domestic demand numbers were interesting, with exports dropped another 35 mb while crush was increased 10 mb. Meanwhile, the May-to-July futures spread is starting to show a stronger carry, indicating commercial traders are becoming more aggressive sellers. While it is unlikely soybeans will collapse to close out the week, a stronger sell-off is possible if noncommercial long-liquidation intensifies. There were no deliveries reported against the March soybean issue, leaving its total at 821 contracts. March soybean meal saw another 39 contracts delivered (total of 851 contracts) while March soybean oil came in at 18 contracts (total of 5,110 contracts).
WHEAT For now the wheat market boils down to two numbers: 1.034 billion bushels and 268.9 million metric tons. Those are USDA'S latest projections on domestic and world ending stocks, with both coming in larger than expected Thursday. The wheat complex traded lower overnight into Friday morning, though selling interest could be classified as light. It seems but a matter of time before traders turn their attention away from old-crop abundance to new-crop production concerns. It's still windy and dry across much of the U.S. Southern Plains, with forecasts not holding out much hope for conditions to change. Therefore some pressure wouldn't be all that surprising, and shouldn't be enough to damage the uptrends on weekly charts for both July Kansas City and Chicago futures contracts.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.57 | $0.06 | -$0.37 | May | -$0.005 |
| Soybeans: | $9.85 | -$0.01 | -$0.79 | May | $0.001 |
| SRW Wheat: | $4.64 | $0.02 | -$0.35 | May | -$0.005 |
| HRW Wheat: | $4.87 | -$0.01 | -$0.47 | May | $0.003 |
| HRS Wheat: | $6.04 | $0.05 | -$0.21 | May | -$0.002 |
Darin Newsom can be reached at darin.newsom@dtn.com
Darin can be followed throughout the day at www.twitter.com\DarinNewsom
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