DTN Early Word Grains

Markets Decked in Red Wednesday Morning

6:00 a.m. CME Globex:

May corn was 1 cent lower, May soybeans were 3 cents lower, and July Kansas City (HRW) wheat was 4 cents lower.

CME Globex Recap:

Markets in general were in the red Wednesday morning, with all eyes seemingly on the global equities as the leader. Following Tuesday's bearish reversal in U.S. stocks, global markets were under pressure overnight as were DJIA futures. Meanwhile, the U.S. dollar strengthened putting pressure on commodities across the board. The oilseed complex was lower, corn was down, and the wheat complex sagged once again. Softs were lower overnight, along with energies and metals.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 344.89 points (1.4%) lower at 23,857.71, the NASDAQ Composite dropped 211.74 points (2.9%) to 7,008.81, and the S&P 500 lost 45.93 points (1.7%) to 2,612.62 Tuesday. DJIA futures were 40 points lower early Wednesday morning. Asian markets closed lower with Japan's Nikkei 225 down 286.01 points (1.3%), Hong Kong's Hang Seng falling 768.30 points (2.5%), and China's Shanghai Composite losing 44.36 points (1.4%). European markets were trading lower with London's FTSE 100 down 41.59 points (0.6%), Germany's DAX losing 149.24 points (1.2%), and France's CAC 40 falling 57.26 points (1.1%). The euro was 0.0013 lower at 1.2392 while the U.S. dollar index added 0.17 to 89.50. June 30-year T-Bonds were 14/32 higher at 146'02 while April gold lost another $3.20 to $1,338.80. Crude oil was $0.60 lower at $64.65 as Brent crude dropped $0.36 to $69.75. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.

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BULL BEAR
1) National average corn basis continues to strengthen, a little at a time. 1) All three corn markets (cash, old-crop futures, new-crop futures) remain in minor downtrends on daily charts.
2) Since soybeans were lower overnight, and given daily patterns seen so far this week, maybe the market can rally to a higher close. 2) Commercial selling continues to be seen in soybeans, with the carry in the May-to-July futures spread threatening a new low.
3) Much of Kansas is on the wrong side of the frost/freeze line this morning, possibly providing support to new-crop Kansas City wheat futures. 3) July Kansas City wheat remains in a solid downtrend on its weekly chart

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 There continues to be little change in the technical patterns of corn, with minor (short-term) trends down for the DTN National Corn Index (NCI, national average cash price), old-crop May futures, and new-crop December. Of those three markets, the NCI is the most oversold and could possibly be the first to find renewed buying interest. Tuesday's sell-off saw basis firm, fractionally, to 36 1/2 cents under the May contract from the 36 3/4 cents calculated Monday. Last Friday's weekly close had national average basis at 37 cents under. It's possible some of the buying interest in basis is due to the lower futures market, with merchandisers looking to keep cash supplies coming in. It's also possible demand has picked up a little this week. However, given the continued weakness of the May-to-July futures spread the smart money is likely on lower futures rather than increased demand.

SOYBEANS Soybeans were lower early Wednesday morning, with overnight losses possibly tied to commercial selling. The carry in the May-to-July futures spread strengthened by about a half-cent, dropping back to last week's low weekly close of 11 cents. While this could be a function of low volume trade, it still reflects an increasingly bearish view of old-crop supply and demand. While Wednesday is expected to be a quiet headline day, Thursday brings with it the weekly export sales and shipment update (early morning) and USDA's Quarterly Stocks report (late morning). Both are expected to be bearish for old-crop U.S. soybeans.

WHEAT The wheat complex was lower again early Wednesday morning, with commercial selling seen in new-crop Kansas City (HRW). However, traders may keep a close eye on pre-dawn temperatures across the U.S. Southern Plains given DTN's frost/freeze map that draws the line from the tip of Oklahoma's Panhandle diagonally across the state of Kansas to approximately Kansas City. While the heart of the wheat growing area, south-central Kansas, looks to be out of harm's way, much of the western part of the state could see near freezing temperatures just before dawn. For now, though, the market doesn't seem to care as July KC remains in a downtrend on its weekly chart with next technical support pegged at $4.69 3/4.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.38 $0.00 -$0.36 May $0.004
Soybeans: $9.42 -$0.06 -$0.78 May $0.004
SRW Wheat: $4.16 -$0.04 -$0.33 May $0.008
HRW Wheat: $4.23 -$0.04 -$0.41 May $0.005
HRS Wheat: $5.77 -$0.04 -$0.17 May $0.003

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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