DTN Early Word Grains
Tuesday, With a Touch of Turnaround
May corn was 1 cent higher, May soybeans were 4 cents higher, and July Kansas City (HRW) wheat was 2 cents lower.
CME Globex Recap:After failing to hold early gains and closing lower Monday, the grain and oilseed complex was mixed as Tuesday got under way. Soybeans and corn were sitting on the plus-side of unchanged, while the wheat complex was unchanged to lower. Energies also rallied, though gold struggled due to renewed buying interest in the U.S. dollar. Meanwhile, DJIA futures were posting another triple-digit gain following Monday's impressive gains.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 669.40 points (2.8%) higher at 24,202.60, the NASDAQ Composite jumped 227.88 points (3.3%) to 7,220.54, and the S&P 500 gained 70.29 points (2.7%) to 2,658.55 Monday. DJIA futures were 126 points higher early Tuesday morning. Asian markets closed higher with Japan's Nikkei 225 up 551.22 points (2.7%), Hong Kong's Hang Seng rallying 242.06 points (0.8%), and China's Shanghai Composite adding 32.93 points (1.0%). European markets were trading higher with London's FTSE 100 up 140.96 points (2.0%), Germany's DAX gaining 250.98 points (2.1%), and France's CAC 40 rallying 81.67 points (1.6%). The euro was 0.0030 lower at 1.2415 while the U.S. dollar index gained 0.26 to 89.33. June 30-year T-Bonds were 9/32 lower at 144'14 while April gold lost $6.00 to $1,349.00. Crude oil was $0.22 higher at $65.77 as Brent crude added $0.27 to $70.39. China's Dalian soybean futures were lower and Malaysian palm oil futures were mixed overnight.
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| BULL | BEAR | ||
| 1) | Corn contracts continue to hold short-term technical support on daily charts. | 1) | With Thursday's weekly shipment update looming for corn, export demand continues to run behind projections. |
| 2) | Another overnight session saw light buying interest in soybeans. | 2) | Another day session in soybeans could uncover heavier selling interest in soybeans. |
| 3) | Recent weather across the U.S. Southern Plains hasn't improved the wheat crop's prospects much. | 3) | July Kansas City wheat remains in a solid downtrend on its weekly chart. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Not much has changed in the corn market over the last 24 hours, with both old-crop May and new-crop December still in minor (short-term) and secondary (intermediate-term) downtrends. On the short-term daily charts, May is holding above technical support near $3.74 1/2 while December sits above its support near $3.95 1/2. However, given the minor trends both find themselves in it would not be surprising for this support to give way on another round of noncommercial selling. Recall from last Friday's CFTC Commitment of Traders report that this group continues to hold a sizeable net-long futures position while the carry in the May-to-July futures spread continues to grow more bearish. However, we could see traders moving to the sidelines ahead of Thursday's USDA Quarterly Stocks and Prospective Plantings reports.
SOYBEANS Soybeans were higher to start the day, similar to what the move the market made early Monday. It will be interesting to see if contracts can find continued buying interest Tuesday, but with USDA's Quarterly Stocks and Prospective Plantings reports set for release Thursday it is unlikely. Technically there is little change on short-term daily charts, with the minor trend for both old-crop May and new-crop November still down. May is sitting above support near $10.19 while November has room to fall to its next support level of $10.17 1/4. Fundamentally the market will continue to monitor news regarding trade negotiations between the United States and China, though as discussed in the piece on DTN ("Cooler Heads Seem to Prevail...") soybeans could be fairly safe from full tariff attack due to China's inelastic demand for the commodity.
WHEAT Winter wheat markets were in the red early Tuesday, led once again by new-crop July Kansas City. Here we see the contract falling back below secondary technical support near $4.88, its sights set on next support near $4.69 3/4. Fundamentally the situation hasn't changed all that much for the HRW crop in the field, though there is murmurings from the U.S. Southern Plains that recent rains may have "saved", not necessarily improved, the wheat crop for now. Given the secondary (intermediate-term) downtrend on July KC's weekly chart, it's possible the contract could fall back to test its previous low of $4.40 1/4 before finding increased buying interest. Thursday's USDA Quarterly Stocks report may not generate as much selling as feared given last Friday's Commitment of Traders report showing noncommercial interest moving back to a net-short futures position in the Chicago market.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.37 | -$0.03 | -$0.37 | May | $0.001 |
| Soybeans: | $9.47 | -$0.03 | -$0.78 | May | -$0.002 |
| SRW Wheat: | $4.21 | -$0.07 | -$0.34 | May | -$0.013 |
| HRW Wheat: | $4.26 | -$0.11 | -$0.42 | May | $0.002 |
| HRS Wheat: | $5.80 | -$0.04 | -$0.17 | May | $0.013 |
Darin Newsom can be reached at darin.newsom@dtn.com
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