DTN Early Word Grains

All's Quiet on the Far-Eastern Front

6:00 a.m. CME Globex:

May corn was 1 cent higher, May soybeans were 4 cents higher, and July Kansas City (HRW) wheat was fractionally lower.

CME Globex Recap:

Following a weekend full of speculation over possible trade retaliation by China, U.S. markets were mostly higher Sunday night into Monday morning on news the two countries were in negotiations to ease trade tensions. Leading the way was the most vulnerable market to attack, soybeans. Winter wheat, Kansas City in particular, followed suit, with corn bringing up the rear. Also, after losing more than 1,100 points to close out last week, DJIA futures were nearly 300 points higher to start this week. On the other hand the U.S. dollar index was lower while metals and energies were mostly lower to start the day.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 426.49 points (1.8%) lower at 23,533.20, the NASDAQ Composite lost 174.01 points (2.4%) to 6,992.67, and the S&P 500 dropped 55.43 points (2.1%) to 2,588.26 Friday. DJIA futures were 280 points higher early Monday morning. Asian markets closed mixed with Japan's Nikkei 225 up 148.24 points (0.7%), Hong Kong's Hang Seng rallying 239.48 points (0.8%), and China's Shanghai Composite down 19.04 points (0.6%). European markets were trading higher with London's FTSE 100 up 21.88 points (0.3%), Germany's DAX gaining 75.05 points (0.6%), and France's CAC 40 rallying 15.97 points (0.3%). The euro was 0.0052 higher at 1.2408 while the U.S. dollar index dropped 0.28 to 89.21. June 30-year T-Bonds were 13/32 lower at 144'10 while April gold lost $1.90 to $1,348.00. Crude oil was $0.28 lower at $65.60 as Brent crude dipped $0.11 to $70.34. China's Dalian soybean futures were higher and Malaysian palm oil futures were mostly higher overnight.

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BULL BEAR
1) Spillover buying from soybeans provided light support to corn early Monday morning. 1) Corn remains in a secondary (intermediate-term) downtrend on its weekly charts.
2) News that the U.S. and China had begun negotiations to ease trade tensions gave a lift to soybeans overnight. 2) The May-to-July soybean futures spread posted a new low weekly close of 11 cents carry last Friday.
3) The weather situation across the U.S. Southern Plains hasn't improved that much, meaning Kansas City wheat could uncover renewed buying interest. 3) Thursday's Quarterly Stocks report is expected to be bearish for wheat.

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 COMMENTS

CORN The corn market traded quietly higher overnight, supported by spillover buying from soybeans. Technically, both old-crop May and new-crop December still look to be in minor (short-term) downtrends on their respective daily charts, though both have posted strong rallies off Friday's spike lows. Fundamentally it all comes down to demand. Traders will keep an eye on Monday's weekly export inspection number for hints as to what Thursday's weekly export shipment update will say. Last week saw national average basis firm slightly, with Friday's DTN National Corn Index calculated at $3.40 1/4, putting it 37 cents under the close of the May contract and 45 1/2 cents under the July. Keep in mind USDA's Quarterly Stocks and Prospective Plantings report are set for release this coming Thursday, followed by U.S. markets being closed for holiday Friday.

SOYBEANS Late weekend news of trade negotiations between the U.S. and China calmed the soybean market overnight, fueling a rally in futures that held through early Monday morning. Despite early higher prices, both old-crop May and new-crop November remain in minor (short-term) downtrends on their respective daily charts. Fundamentally, keep an eye on the May-to-July futures spread this week after it stretched to a new low weekly close of an 11-cent carry Friday. Last week saw national average basis firm by about a 1/2 cent, not surprising given the 21-cent sell-off in futures (weekly close-only). Traders will keep a close eye on trade talk developments, while waiting for the release of Thursday's USDA Quarterly Stocks and Prospective Plantings reports. The latter is expected to have more of an impact on new-crop soybeans than the former on old-crop.

WHEAT Winter wheat markets showed gains overnight, though as the writing of this piece moved into Monday morning, both Chicago and Kansas City contracts edged lower. This despite potential spillover buying from soybeans and corn, and a lower U.S. dollar index to start the day. New-crop July winter contracts for both Chicago and Kansas City remain in secondary (intermediate-term) downtrends on their weekly charts, while daily charts are trying to show minor (short-term) uptrends. The overriding factor for wheat remains its overwhelmingly bearish fundamentals, indicated by the strong carry in forward curves for both winter markets (spring wheat, not so much). Wheat could be challenged fundamentally again this coming Thursday with the release of what is expected to be bearish quarterly stocks numbers (as of March 1) from USDA.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.40 $0.01 -$0.37 May -$0.002
Soybeans: $9.50 -$0.01 -$0.78 May $0.004
SRW Wheat: $4.28 $0.05 -$0.32 May $0.003
HRW Wheat: $4.37 $0.08 -$0.42 May -$0.003
HRS Wheat: $5.85 $0.10 -$0.18 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

(KR)

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