DTN Early Word Grains
Thank You Sir, May We Have Another
May corn was 4 cents lower, May soybeans were 15 cents lower, and July Kansas City (HRW) wheat was 6 cents lower.
CME Globex Recap:Lower overnight trade by most markets was a foregone conclusion after it was announced President Trump made a threat of new tariffs on Chinese imports to the tune of 100 billion dollars. Sure enough, old-crop May soybeans traded as much as 28 cents lower while DJIA futures fell to triple-digit losses again. The energy complex was lower, though off its overnight lows, while gold initially rallied almost $10 before sliding back to near unchanged.
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The Dow Jones Industrial Average closed 240.92 points (1.0%) higher at 24,505.22, the NASDAQ Composite gained 34.44 points (0.5%) to 7,076.55, and the S&P 500 rallied 18.15 points (0.7%) to 2,662.84 Thursday. DJIA futures were 170 points lower early Friday morning. Asian markets closed mostly lower with Japan's Nikkei 225 down 77.90 points (0.4%), Hong Kong's Hang Seng up 326.25 points (1.1%) and China's Shanghai Composite closed for holiday. European markets were trading lower with London's FTSE 100 down 5.66 points (0.1%), Germany's DAX losing 60.05 points (0.5%), and France's CAC 40 falling 24.44 points (0.5%). The euro was 0.0003 higher at 1.2245 while the U.S. dollar index lost 0.03 to 90.42. June 30-year T-Bonds were 3/32 higher at 145'00 while June gold added $0.10 to $1,328.60. Crude oil was $0.27 lower at $63.27 as Brent crude dipped $0.24 to $68.09. Malaysian palm oil futures were higher again overnight.
| BULL | BEAR | ||
| 1) | Corn contracts were able to hold above Thursday's lows overnight into Friday morning, showing consolidation rather than another meltdown. | 1) | Based on marketing year total shipments of corn, total export demand is projected to come up about 300 mb short of USDA's current projection. |
| 2) | Similar to earlier this week, soybean contracts were rocked early by more tariff threats only to bounce back. | 2) | The U.S. President likes to make tariff threats, making the U.S. soybean market collateral damage. |
| 3) | It's going to get really cold across the U.S. Southern Plains HRW wheat growing area this coming weekend. | 3) | Spillover selling from other markets could keep wheat contracts under pressure. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN In the grand scheme of things corn didn't see any change on its short-term technical charts overnight. Though old-crop May dropped as much as 7 1/2 cents, it stayed above Thursday's low of $3.80 3/4 before rallying. Initial short-term resistance is at Thursday's high of $3.89 1/2. The pattern is similar for new-crop December with Thursday's range of $4.05 to $4.13. Fundamentally the old-crop May-to-July futures spread remains bearish, its carry holding at last week's close of 8 1/2 cents. However, the new-crop December-to-March spread looks to be in position to make a new 4-week low below the previous carry of 7 1/4 cents. Thursday's weekly export sales and shipment update showed total marketing year shipments of 954 mb, projecting total export demand of 1.927 bb as compared to USDA's current guess of 2.225 bb.
SOYBEANS U.S. soybean farmers can thank the president for an overnight sell-off that initially took old-crop May futures down 28 1/4 cents as he once again ignored ongoing trade negotiations to make new tariff threats against China. What's more interesting though is that the overnight low (so far) by May soybeans of $10.03 was a test of minor (short-term) support at $10.04, a price that marks the 61.8% retracement level of the previous uptrend from $9.55 3/4 through the high of $10.82 1/2. Yes, the contract still looks to be in a downtrend on its daily chart, though muddled by the unnecessary increase in volatility of daily threats. Fundamentally the May-to-July futures spread remains bearish and total export shipments of 1.528 bb project total marketing year export demand of 1.792 bb as compared to USDA's current guess of 2.065 bb.
WHEAT Friday, if you hear a U.S. Southern Plains HRW wheat farmer talking about "wheat in the teens", he/she isn't talking about price, but rather the expected low temperatures across most of the growing area Saturday morning. How much did that matter to winter wheat markets overnight into Friday morning? Nada. Chicago (SRW) was down near 5 cents and Kansas City (HRW) was off 6 cents. Wheat, at least overnight, got caught up in the president's latest threats of new tariffs against China, though as we've seen in the past the complex could soon shrug off this constant source of noise. The July Kansas City contract remains in a minor (short-term) uptrend on its daily chart, falling back from a test of resistance at $5.20 1/4 (its overnight high was $5.19 1/2).
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.55 | $0.08 | -$0.35 | May | $0.000 |
| Soybeans: | $9.58 | $0.17 | -$0.73 | May | $0.012 |
| SRW Wheat: | $4.33 | $0.09 | -$0.32 | May | $0.002 |
| HRW Wheat: | $4.57 | $0.12 | -$0.41 | May | -$0.003 |
| HRS Wheat: | $5.77 | $0.13 | -$0.13 | May | $0.000 |
Darin Newsom can be reached at darin.newsom@dtn.com
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