DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

May corn was 11 cents lower, May soybeans were 46 cents lower, and July Kansas City (HRW) wheat was 7 cents lower.

CME Globex Recap:

It looks to be an interesting day in markets as an all-out trade war broke out overnight. In response to President Trump's new tariffs on China Tuesday, the Chinese government announced additional tariffs on U.S. imports planes, soybeans, and automobiles. DJIA futures have fallen more than 600 points, crude oil is down more than $1, soybeans immediately fell 50-plus cents, and gold is up $10. Computer algorithms could be set to sell throughout the day.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 389.17 points (1.7%) higher at 24,033.36, the NASDAQ Composite gained 71.16 points (1.0%) to 6,941.28, and the S&P 500 rallied 32.57 points (1.2%) to 2,614.45 Tuesday. DJIA futures were 600 points lower early Wednesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 up 27.26 points (0.1%), Hong Kong's Hang Seng down 661.41 points (2.1%), and China's Shanghai Composite off 5.52 points (0.2%). European markets were trading lower with London's FTSE 100 down 37.75 points (0.5%), Germany's DAX falling 174.58 points (1.5%), and France's CAC 40 losing 40.42 points (0.8%). The euro was 0.0010 higher at 1.2281 while the U.S. dollar index slipped 0.06 to 90.12. June 30-year T-Bonds were 15/32 higher at 146'11 while June gold added $10.00 to $1,347.30. Crude oil was $1.14 lower at $62.37 as Brent crude lost $1.16 to $66.96. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

	BULL		BEAR
1)	Corn contracts were able to rally off initial lows as the overnight session wore on.	1)	To complete its 3-wave downtrend, May corn needs to move below its previous low.
2)	A bullish factor for soybeans...I'll get back to you.	2)	China placed a tariff on U.S. soybean imports. That is all.
3)	Adverse weather across the U.S. Southern Plains could continue to support the Kansas City (HRW) wheat market.	3)	Spillover pressure from soybeans and corn could keep wheat on the defensive Wednesday.

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 Well, at least corn wasn't "quiet again" overnight. Contracts fell by as much as 16 cents shortly after China announced another round of retaliatory tariffs against U.S. imports, including soybeans, early Tuesday morning. This meant old-crop May tested support at $3.74 1/2 once again before posting a decent rally. The contract remains in a minor (short-term) 3-wave downtrend on its daily chart meaning it should move below its previous spike low of $3.69 1/4. It's possible this could happen Wednesday, if computerized selling intensifies over the course of the day. The other possibility is that the initial round of selling dies down, leaving a vacuum above the market it may move back in to. Meaning, the overnight low could hold for now. Stay tuned, it promises to be an interesting day.

SOYBEANS Soybeans were included in this round of retaliatory tariffs announced by China early Wednesday morning, knocking the old-crop May contract down as much as 54 cents overnight. This led to a test of support at $9.85 1/2 (overnight low so far was $9.83 1/2), a price that marks the 76.4% retracement level of the previous minor (short-term) uptrend. If this support fails to hold over the course of the day session, May beans could fall back to its previous ow of $9.55 3/4. Fundamentally the market remains bearish, as indicated by both national average basis and the carry in the May-to-July futures spread. Speaking of the nearby spread, its carry has strengthened to 11 1/2 cents through early Wednesday.

WHEAT The wheat complex got caught up in the overnight selling tied to China's announced retaliatory tariffs on U.S. imports, this round including soybeans. However, selling was somewhat limited as contracts were showing single-digit losses, bouncing back from roughly a 10-cent sell-off immediately following China's announcement. Weather continues to dominate the Kansas City (HRW) market with the new-crop July contract taking a breather in its continued minor (short-term) uptrend. Traders will keep a close eye on how deep Wednesday's sell-off goes, with a move below Tuesday's low of $4.90 3/4 likely to trigger additional selling. The contract's overnight low (so far) was $4.93.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.53	$0.01	-$0.36	May	$0.001
Soybeans:	$9.63	$0.04	-$0.75	May	$0.013
SRW Wheat:	$4.25	$0.10	-$0.32	May	-$0.012
HRW Wheat:	$4.44	$0.17	-$0.41	May	-$0.003
HRS Wheat:	$5.71	$0.10	-$0.12	May	$0.005

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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