DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 1 cent higher, July soybeans were 5 cents higher, and July Kansas City (HRW) wheat was 3 cents higher.

CME Globex Recap:

The grain and oilseed complex was higher early Wednesday despite the renewed strength of the U.S. dollar. Soybeans led the way, followed by winter wheat and then corn. Other commodity sectors were mixed with crude oil higher and gold lower. Meanwhile, cotton tried to recover some of Tuesday's sharp loss.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 424.56 points (1.7%) lower at 24,024.13, the NASDAQ Composite lost 121.25 points (1.7%) to 7,007.35, and the S&P 500 fell 35.73 points (1.3%) to 2,634.56 Tuesday. DJIA futures were 55 points lower early Wednesday morning. Asian markets closed lower with Japan's Nikkei 225 down 62.80 points (0.3%), Hong Kong's Hang Seng losing 308.09 points (1.0%), and China's Shanghai Composite falling 10.95 points (0.4%). European markets were trading lower with London's FTSE 100 down 49.82 points (0.7%), Germany's DAX falling 200.85 points (1.6%), and France's CAC 40 off 34.90 points (0.6%). The euro was 0.0022 lower at 1.2210 while the U.S. dollar index rallied 0.19 to 90.98. June 30-year T-Bonds were 20/32 lower at 141'29 while June gold lost $7.70 to $1,325.30. Crude oil was $0.13 higher at $67.83 as Brent crude added $0.02 to $73.88. China's Dalian soybean futures were lower and Malaysian palm oil futures were mixed overnight.

	BULL		BEAR
1)	Corn contracts are in position to close higher for the third consecutive day.	1)	A common pattern for any market, particularly when looking at a short-term daily chart, is to see a 3-day move against the prevailing trend similar to what corn is trying to pull off.
2)	The carry in the July-to-August soybean spread remains weak, reflecting a more bullish commercial outlook once the May contract moves into delivery.	2)	If minor (short-term) technical support fails to hold in soybeans, contracts could see selling interest quickly accelerate.
3)	July Kansas City (HRW) looks to be moving back into its minor (short-term) uptrend.	3)	Fundamentally, winter wheat futures spreads remain extremely bearish

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 Following last Friday's sell-off the corn market is hinting at a third consecutive higher close. However, this has not changed the fact that technically the market remains in a minor (short-term) downtrend on its daily chart. It could, actually, increase selling interest as Wednesday's session progresses. As discussed in this space before, the key will be activity in the futures spreads, most notably the July-to-September as the May contract nears delivery next Monday. It should be noted that the September contract, usually viewed as a hybrid of old-crop and new-crop, could be viewed more as an old-crop contract given the weather delayed start to planting this spring. As of Wednesday morning the July-to-September spread's carry of 7 1/4 cents continues to cover a neutral 58% of calculated full commercial carry.

SOYBEANS Soybean futures a solid rally overnight with contracts sitting near session highs early Wednesday morning. Old-crop July continues to hold above minor (short-term) technical support at $10.27 3/4, a price that marks the 50% retracement level of the previous uptrend from $9.65 1/4 through the high of $10.90 1/4. If soybeans are viewed as being in a minor sideways trend, wide-ranging at that, it would not be surprising to see the market try to build some bullish momentum. However, a move below Tuesday's low of $10.27 3/4 could spark another wave of selling with next support at $10.13, then $9.94 3/4. Fundamentally there is little change to the market with the strong carry in the May-to-July futures spread bearish and the weak carry of the July-to-August bullish.

WHEAT The wheat complex was higher early Wednesday, led by the continued rally in new-crop Kansas City. After testing minor (short-term) technical support at $4.99 3/4 on its daily chart the last 7 sessions, the July contract posted a bullish outside range Tuesday (traded outside the previous day's range before closing higher) leading to an overnight move beyond the previous high of $5.16. This could set the contract up for a return to its short-term uptrend, a move that would project a high beyond the previous peak of $5.47 3/4. While this seems to be a daunting task, particularly when the strong 18-cent carry of the July-to-September futures spread is taken into account, it's possible due to the little actual change in the HRW crop following last weekend's less that forecast rains across parts of the U.S. Southern Plains.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.51	$0.03	-$0.31	May	$0.006
Soybeans:	$9.54	$0.02	-$0.68	May	$0.006
SRW Wheat:	$4.43	$0.11	-$0.29	May	-$0.003
HRW Wheat:	$4.55	$0.09	-$0.38	May	-$0.002
HRS Wheat:	$5.83	$0.04	-$0.10	May	-$0.004

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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