DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 1 cent lower, July soybeans were 15 cents lower, and July Kansas City (HRW) wheat was 7 cents lower.

CME Globex Recap:

The rumor of a trade deal between the United States and China that sparked a rally late Thursday looks to have been dispelled overnight. Soybeans were showing strong double-digit losses, wheat was down about a nickel, and corn was a penny lower. Other commodity sectors were mixed with metals mostly lower and energies mostly higher. The U.S. dollar index rallied once again while DJIA futures slipped lower.

OUTSIDE MARKETS:

The Dow closed 5.17 points higher at 23,930.15, the Nasdaq Composite lost 12.75 points (0.2%) to 7,088.15, and the S&P 500 dipped 5.94 points (0.2%) to 2,629.73 Thursday. DJIA futures were 25 points lower early Friday morning. Asian markets closed lower with Japan's Nikkei 225 down 35.25 points (0.1%), Hong Kong's Hang Seng losing 386.87 points (1.3%), and China's Shanghai Composite off 9.83 points (0.3%). European markets were trading mostly higher with London's FTSE 100 up 41.77 points (0.6%), Germany's DAX adding 57.99 points (0.5%), and France's CAC 40 off 0.41 point. The euro was 0.0031 lower at 1.1957 while the U.S. dollar index gained 0.17 to 92.60. June 30-year T-Bonds were 6/32 higher at 143'24 while June gold dropped $2.70 to $1,310.00. Crude oil was $0.04 higher at $68.47 as Brent crude added $0.04 to $73.66. China's Dalian soybean futures were mixed and Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	Corn contracts posted new highs during Thursday's session.	1)	Corn could see spillover selling from soybeans during Friday's session.
2)	Rumors of trade deals being reached between the United States and China could spark a rally in soybeans.	2)	The reality of no such trade agreement being reached between the U.S. and China could lead to renewed selling interest Friday.
3)	New-crop July winter wheat contracts remain in 5-wave uptrend patterns on their respective weekly charts.	3)	This week's move to new highs in both July Chicago and Kansas City wheat mean Wave 5 could crest at any time.

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 Stop me if you've heard this one: Corn contracts were under light pressure after posting new highs the day before. It should sound familiar to you as Friday morning marks the third day in a row this same pattern has been seen. Yet the corn markets (old-crop, new-crop) are just as likely to go down Friday as they were the two previous days. What does that mean? Given both old-crop July and new-crop December are showing overbought technical signals on daily (short-term) and weekly (intermediate-term) price charts a top could form in either market at any time. Yet traders, mostly noncommercial at this point, are still buying into the market. Fundamentally, the market is little changed with the old-crop July-to-September futures spread covering a neutral (but leaning toward the bearish side) level of calculated full commercial carry while the new-crop December-to-March spread is also neutral (but leaning toward the bullish side). Delivery of 223 contracts was reported against the May issue, putting the total at 1,856 contracts.

SOYBEANS Thursday's activity in soybeans was a fascinating case study in the power headlines can have over algorithmic trade. Soybean markets (both old-crop and new-crop) were wallowing in losses for most of the day, at their lowest point, reaching down about 7 cents, before a rumor that a trade deal had been reached between the U.S. and China late in the session. Soybean contracts abruptly changed course as buy programs were triggered, rallying roughly 20 cents off session lows. However, as the sun set in the U.S. and rose in China, trade tensions proved not to be resolved and soybeans reacted accordingly. Early Friday morning has contracts posting strong double-digit losses and near session lows. The funny thing is, daily charts remain unchanged. Yes, both old-crop July and new-crop November posted bullish outside ranges during Thursday's sessions followed by inside ranges overnight into Friday morning. It would not be surprising to see either or both contracts fall below Thursday's lows before the day is through. Delivery of 60 contracts was reported against the May issue, putting the total at 834 contracts.

WHEAT The wheat complex was lower overnight into Friday morning on a light round of noncommercial selling. This week, parts of the growing area, both the U.S. Southern Plains HRW and Midwest SRW, have received some much needed rain. Whether it is enough to change the fate of the crop in the field, particularly for HRW, remains to be seen. The surest way to tell will be when the combines start to roll this harvest, an event that should be about to begin in far southern Texas. Technically both the July Chicago and July Kansas City contracts remain in secondary (intermediate-term) 5-wave uptrends on their respective daily charts, a pattern both have been in since mid-December 2017 (for further discussion on winter wheat's fundamental and technical situation, see this week's Newsom On the Market column posted on DTN subscription sites later Friday morning). The issue both contracts have is short-term daily charts could roll over into downtrends at any time. Fundamentally, traders will continue to monitor weekend weather forecasts. Delivery of 24 contracts was reported against the May Kansas City issue, putting its total at 852 contracts. There continues to be no deliveries reported against the May Chicago issue.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.72	$0.03	-$0.36	Jul	$0.001
Soybeans:	$9.80	$0.10	-$0.73	Jul	$0.002
SRW Wheat:	$5.05	$0.12	-$0.33	Jul	$0.005
HRW Wheat:	$5.21	$0.12	-$0.47	Jul	-$0.003
HRS Wheat:	$6.18	$0.06	-$0.12	Jul	$0.003

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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