DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

May corn was fractionally lower, May soybeans were 3 cents higher, and July Kansas City (HRW) wheat was 7 cents lower.

CME Globex Recap:

The grain and oilseed complex was mostly lower early Tuesday morning, with only follow-through commercial buying seen in soybeans. Winter wheat was lower after burning through existing buy orders during Monday's sharp rally, possibly. Corn was back to being quiet, waiting for the release of Tuesday's USDA reports. Energies continued to rally while metals were mostly lower. DJIA futures posted a strong 250-point jump after Monday saw the Big Board erase nearly all of its 300-plus points gain in the closing minutes.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 46.34 points (0.2%) higher at 23,979.10, the NASDAQ Composite gained 35.23 points (0.5%) to 6,950.34, and the S&P 500 rallied 8.69 points (0.3%) to 2,613.16 Monday. DJIA futures were 250 points higher early Tuesday morning. Asian markets closed higher with Japan's Nikkei 225 up 116.06 points (0.5%), Hong Kong's Hang Seng gaining 499.16 points (1.6%) and China's Shanghai Composite adding 52.03 points (1.7%). European markets were trading higher with London's FTSE 100 up 32.71 points (0.5%), Germany's DAX rallying 128.51 points (1.0%), and France's CAC 40 gaining 32.41 points (0.6%). The euro was 0.0005 higher at 1.2328 while the U.S. dollar index dipped 0.03 to 89.80. June 30-year T-Bonds were 5/32 lower at 145'29 while June gold lost $1.00 to $1,339.10. Crude oil was $0.79 higher at $64.21 as Brent crude gained $0.88 to $69.53. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.

	BULL		BEAR
1)	Production estimates for both Argentine and Brazilian corn crops are expected to decrease in Tuesday's WASDE reports.	1)	USDA is expected to increase its domestic corn ending stocks number in Tuesday's Supply and Demand reports.
2)	Decreases in projected Argentine soybean production is expected to be larger than increases in Brazilian soybeans in Tuesday's WASDE reports.	2)	It's possible USDA could raise its domestic ending stocks projection above 600 mb in the April round of Supply and Demand reports.
3)	Weather remains bullish for both U.S. winter wheat and spring wheat	3)	All wheat domestic ending stocks are expected to increase slightly in Tuesday's USDA reports.

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 The intrinsic value of the corn market, the DTN National Corn Index (NCI, national average cash price) was calculated at $3.56 1/4 Monday evening putting it within a 1/2-cent of its recent high and a penny of its 12-month high of $3.57 1/4 (July 10, 2017). However, heading into Tuesday's round of monthly USDA Supply and Demand repots the NCI finds itself sharply overbought, short-term, with its daily stochastics sitting above the 90% mark. It's possible this could open the door to post-report selling, particularly with USDA expected to increase domestic stocks once again. However, Monday's impressive weekly export inspection number 76.3 mb confirms basis strength seen last week, and indicates Thursday's weekly export shipment number should also be large. If this demand has carried forward into the new week it could provide support, even against a possible bearish government report. Also, traders will keep a close eye on production numbers from both Brazil and Argentina, as well as projected world ending stocks.

SOYBEANS The intrinsic value of soybeans, its DTN National Soybean Index (NSI, national average cash price) remains in a short-term uptrend on its daily chart, though testing resistance near $9.76 1/4. Monday evening found the NSI calculated at $9.76 1/4, gaining 14 1/2 cents following a strong rally in the futures market. The NSI still looks to have room to move to the upside, with the next target up at $9.84 3/4. This could make the reaction to Tuesday's round of monthly USDA Supply and Demand numbers more interesting, given expectations are for another increase in domestic ending stocks. The daily chart for the NSI would suggest traders are going to focus more on South American numbers, most notably the net-change of increased Brazilian production and decreases in Argentina's crop. World ending stocks are expected to decrease slightly. Demand for U.S. soybeans remains slow, but this has done little to dampen recent buying enthusiasm in the market. It's possible noncommercial traders could now be holding the largest net-long futures position in over five years, with this Friday's CFTC Commitments of Traders report showing numbers as of today's post-report close.

WHEAT The wheat complex took a breather overnight, not surprising after its spring higher for much of Monday's session. New-crop July Kansas City (HRW) gave back roughly half of Monday's final 16-cent rally after easily moving through technical resistance at $5.35 1/2. July Chicago (SRW) has been quite as exuberant in its rally, stalling between resistance marks of $4.95 1/2 and $5.04 on its weekly chart. Still, the weather situation across the U.S. Southern Plains hasn't changed and the HRW crop is looking ragged. In spring wheat, the Northern Plains are seeing a different sort of weather issue with winter refusing to loosen its grip so ideas of planting can take hold. As for wheat in general, Tuesday's round of monthly USDA Supply and Demand reports is expected to be bearish, with domestic ending stocks projected to increase once again.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.56	$0.02	-$0.35	May	$0.000
Soybeans:	$9.76	$0.15	-$0.71	May	$0.012
SRW Wheat:	$4.59	$0.18	-$0.32	May	-$0.010
HRW Wheat:	$4.82	$0.16	-$0.40	May	$0.002
HRS Wheat:	$6.14	$0.19	-$0.13	May	$0.000

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

(KR)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.