DTN Early Word Grains

Turning Around Again

6:00 a.m. CME Globex:

May corn was fractionally higher, May soybeans were 8 cents higher, and July Kansas City (HRW) wheat was 7 cents higher.

CME Globex Recap:

Once again, markets were unable to follow-through on Monday activity overnight into Tuesday mornings, setting up the tired cliché of "Turnaround Tuesday". Most notable of these markets were soybeans, energies, and DJIA futures. Corn did what it usually does and trade fractionally lower while Kansas City wheat did continue its move higher.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 458.92 points (1.9%) lower at 23,644.19, the NASDAQ Composite lost 193.33 points (2.7%) to 6,870.12, and the S&P 500 fell 58.99 points (2.2%) to 2,581.88 Monday. DJIA futures were 49 points higher early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 down 96.29 points (0.5%), Hong Kong's Hang Seng up 86.72 points (0.3%), and China's Shanghai Composite off 26.55 points (0.8%). European markets were trading lower with London's FTSE 100 down 44.10 points (0.6%), Germany's DAX falling 157.89 points (1.3%), and France's CAC 40 losing 39.96 points (0.8%). The euro was 0.0009 higher at 1.2311 while the U.S. dollar index dipped 0.06 to 89.97. June 30-year T-Bonds were 11/32 lower at 146'13 while April gold lost $4.50 to $1,337.60. Crude oil was $0.34 higher at $63.35 as Brent crude added $0.34 to $67.98. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

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BULL BEAR
1) Monday's spike high in new-crop December corn could be viewed as a bullish breakout. 1) Monday's lower close after a spike high was not bullish for the corn market.
2) For whatever reason, noncommercial traders continue to defend their net-long futures position in old-crop soybeans. 2) If one wants to consider fundamentals, what seems to be a dying idea, soybean ending stocks are projected at more than 700 mb following last week's Quarterly Stocks report.
3) July Kansas City wheat remains in a minor (short-term) uptrend on its daily chart. 3) The carry in new-crop winter wheat spreads continues to show bearish fundamentals.

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 Corn was quiet overnight, again, with contracts sitting with fractions of the previous day's close, again. Technically not much has changed, with old-crop May still showing a wide-ranging 3-wave downtrend on its short-term daily chart. Dec corn's new contract high of $4.16 would've cast the contract in a different light if not for a lower close Monday. While its minor (short-term) price pattern still resembles a downtrend it is now more notable for its number of spike moves. And it's only April 3. Fundamentally there is little fresh news with President Trump again threatening to end NAFTA over the 3-day holiday weekend and China's tariffs on imports of U.S. ethanol going largely unnoticed. Keep an eye on the May-to-July futures spread as it continues to hold at an 8 1/2-cent carry, covering a bearish level of calculated full commercial carry.

SOYBEANS Despite its recent summer-like trade, old-crop May soybeans remain in a minor (short-term) downturned on its daily chart. The combined spike rally of Thursday and Monday saw the contract move from a test of support near $10.19 to a test of resistance at $10.54 1/2. Theoretically, based on 3-wave downtrend tendencies, the contract should move below its previous low of $10.09 1/4, particularly with both basis and the nearby May-to-July futures spread bearish. However, noncommercial traders have shown a willingness to defend their net-long futures position rather than continued liquidation, regardless of the mammoth level of ending stocks implied by March 1 quarterly stocks. For now, questions remain regarding South American production and that seems to be enough to keep funds interested.

WHEAT Winter wheat markets were higher early Tuesday, with Chicago reversing course from Monday's close while the minor (short-term) uptrend in new-crop July Kansas City continues to strengthen. Initial resistance for the latter remains near $5.05, a price that marks the 33% retracement level of the previous downtrend from $5.65 through the low of $4.75 1/2. Despite the continued strong carry in the Kansas City July-to-September spread (19 1/4 cents Tuesday morning) there is concern regarding the condition of the crop in the field. This isn't something new over the last 24 hours, but rather dates back to shortly after seeding occurred last fall. Since then the HRW crop of the U.S. Southern Plains has faced drought, unending winds, potential winter kill, and possible spring freeze damage. Hail and pestilence are waiting to be tagged in at a later date.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.52 $0.01 -$0.36 May $0.013
Soybeans: $9.59 -$0.08 -$0.76 May $0.014
SRW Wheat: $4.15 -$0.05 -$0.31 May -$0.007
HRW Wheat: $4.27 $0.01 -$0.41 May $0.007
HRS Wheat: $5.61 -$0.02 -$0.13 May $0.034

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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