DTN Early Word Grains
Turnaround Friday
July corn was unchanged, July soybeans were 5 cents lower, and July Kansas City (HRW) wheat was 1 cent higher.
CME Globex Recap:Markets in general were moving in the opposite direction of Thursday's close. That makes Friday, at least early, a Turnaround Friday. Why should Tuesday have all the fun? Corn and the soybean complex was in the red while wheat markets were green. The energy complex was all under pressure. Metals were mixed with gold showing a small gain. All while the U.S. dollar index pressed toward next resistance at 91.93.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 238.51 points (1.0%) higher at 24,322.34, the NASDAQ Composite gained 119.94 points (1.6%) to 7,116.68, and the S&P 500 added 27.54 points (1.0%) to 2,666.94 Thursday. DJIA futures were 80 points lower early Friday morning. Asian markets closed higher with Japan's Nikkei 225 up 148.26 points (0.7%), Hong Kong's Hang Seng gaining 272.99 points (0.9%), and China's Shanghai Composite rallying 7.20 points (0.2%). European markets were trading higher with London's FTSE 100 up 42.47 points (0.6%), Germany's DAX gaining 82.14 points (0.6%), and France's CAC 40 adding 14.11 points (0.3%). The euro was 0.0028 lower at 1.2076 while the U.S. dollar index gained 0.28 to 91.85. June 30-year T-Bonds were 14/32 higher at 142'26 while June gold rallied $0.80 to $1,318.70. Crude oil was $0.24 lower at $67.95 as Brent crude lost $0.26 to $74.48. China's Dalian soybean and Malaysian palm oil futures were both lower again overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | The DTN National Corn Index continues to test resistance on its daily and weekly close-only charts heading into Friday. | 1) | If soybeans move lower Friday, corn futures could unenthusiastically follow. |
| 2) | Deferred soybean futures spreads continue to reflect a long-term bullish view of supply and demand. | 2) | The weak carry in the July-to-August soybean spread is in position to establish a downtrend, reflecting an increasingly bearish view of fundamentals. |
| 3) | Weather remains the bullish factor for new-crop winter wheat heading into another weekend. | 3) | Fundamentally, winter wheat futures spreads remain extremely bearish |
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MORE COMMODITY-SPECIFIC COMMENTSCORN The analysis for the corn market hasn't changed much over the last 24 hours, with the DTN National Corn Index (NCI, national average cash price) still poised for a bullish breakout depending on Friday's close. The NCI was calculated at $3.56 1/4 Thursday evening, holding it near overhead resistance at $3.57 on its daily and weekly close-only chart. National average basis has firmed by nearly 2 cents (through Thursday evening) this week despite an almost 10-cent gain by the July futures contract. This stronger basis continues to reflect improving demand (export and likely feed) over the third quarter of the marketing year, demand that should be accounted for in the June Quarterly Stocks report.
SOYBEANS The mettle of short-term soybean market bulls could be tested Friday if the July futures contract challenges this past Tuesday's low of $10.27 3/4. This price is also the 50% retracement level of the previous minor (short-term) uptrend from $9.65 1/4 through the high of $10.90 1/4. The contract posted an overnight low (through early Friday morning) of $10.32 1/4. The key to the soybean market, as discussed for quite some time, remains the fundamental situation indicated by its futures spreads. With the May contract set to move into delivery next Monday, the carry in the May-to-July has stretched to its strongest level of 11 3/4. Meanwhile, the weak 2 1/4-cent carry of the July-to-August is threatening a bearish breakdown if it finishes the week below its previous low of 2 1/2 cents.
WHEAT New-crop July Kansas City wheat looks to continue its consolidation to close out the week. Given the wide range between Friday's trendline resistance at $5.38 and trendline support at $5.07 1/2, it's safe to say the contract most likely won't see a breakout heading into the weekend. Sunday night's trade will depend at least in part on what weather does, though winter wheat will still be badgered by the opposing forces of concern over the new-crop in the field and absurdly bearish long-term fundamentals. Regarding the latter: The July-to-September Kansas City futures spread is showing a carry of 18 cents early Friday while the same spread in Chicago sits at 17 cents.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.56 | $0.00 | -$0.30 | May | $0.007 |
| Soybeans: | $9.60 | $0.01 | -$0.68 | May | $0.006 |
| SRW Wheat: | $4.51 | -$0.06 | -$0.30 | May | -$0.003 |
| HRW Wheat: | $4.65 | -$0.05 | -$0.37 | May | -$0.001 |
| HRS Wheat: | $5.90 | -$0.01 | -$0.10 | May | -$0.006 |
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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