DTN Early Word Grains

Hangover from Thursday

6:00 a.m. CME Globex:

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

CME Globex Recap:

The grain and oilseed complex was lower overnight into early Friday morning, almost as if market participants were hung over from the abundance of government numbers released Thursday. Soybeans were sitting on session lows, corn was quietly lower, and wheat remained under pressure. This despite the U.S. dollar being under pressure again, providing support to both metals and energies.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 196.99 points (0.8%) higher at 24,739.53, the Nasdaq Composite gained 65.07 points (0.9%) to 7,404.97, and the S&P 500 added 25.25 points (0.9%) to 2,723.07 Thursday. DJIA futures were 37 points higher early Friday morning. Asian markets closed mostly higher with Japan's Nikkei 225 up 261.30 points (1.2%), Hong Kong's Hang Seng gaining 312.84 points (1.0%), and China's Shanghai Composite down 11.15 points (0.4%). European markets were trading mixed with London's FTSE 100 up 1.52 points, Germany's DAX down 44.43 points (0.3%), and France's CAC 40 down 18.88 points (0.3%). The euro was 0.0019 higher at 1.1936 as the U.S. dollar index lost 0.18 to 92.54. June 30-year T-Bonds were 11/32 higher at 143'17 while June gold gained $2.70 to $1,325.00. Crude oil was $0.18 higher at $71.54 while Brent crude added $0.05 to $77.52. China's Dalian soybean futures were lower overnight.

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BULL BEAR
1) Export demand remains solid for U.S. corn supplies, confirmed once again with Thursday's weekly export shipment number of 70.3 million bushels (mb). 1) July corn is nearing a short-term bearish breakdown on its daily chart.
2) July soybeans continue to hold short-term technical support, hinting at a possible bullish turn on its daily chart. 2) The old-crop July-to-August futures spread continues to see its carry strengthen, indicating a less bullish view of fundamentals.
3) If July KC wheat can hold technical short-term technical support Friday, renewed buying interest could be seen early next week. 3) Export demand for U.S. wheat supplies remains near non-existent. Total shipments through May 3 were only 771 mb.

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 Corn contracts were lower early Friday morning, hinting at enough continued selling to possibly move both the old-crop July and new-crop December contracts into minor (short-term) downtrends on their respective daily charts. July corn is testing initial support at $4.01, though it would take a break of Tuesday's low of $3.99 1/4 to possibly trigger the next round of selling. Fundamentally, the market remains little changed, with Thursday's weekly export shipment number of 70.3 mb (for the week ending Thursday, May 3) pushing marketing year total shipments to 1.285 billion bushels (bb). Given the average shipped at this point of the marketing year, total corn export demand would be projected at 2.089 bb, 136 mb less than USDA's ongoing demand estimate of 2.225 bb. It should also be noted that the July-to-September spread is in position to post a new weekly low close, in regards to carry, as it sits below the previous low on its weekly close-only chart of 8 cents. If this happens it would confirm a clear downtrend in the spread, indicating the commercial side is growing more comfortable with old-crop supply and demand. Delivery of 33 contracts was reported against the May issue, putting the total at 2,685 contracts.

SOYBEANS Despite Thursday's volatile session, the minor (short-term) pattern for old-crop July soybeans did not change. The contract continues to hold above support on its daily chart at $10.13 while daily stochastics (short-term momentum study) indicate an oversold situation. Still, a move to a new weekly low below $10.10 3/4 could spark a round of selling to test next technical support at $9.94 3/4. Fundamentally, there isn't much to get excited about with the old-crop market, with Thursday's lackluster weekly export shipments of 17.3 mb (for the week ending Thursday, May 3) putting total marketing year shipments at 1.615 bb. Given the point of the marketing year, total exports would project to 1.820 bb, or 245 mb short of USDA's continued projection of 2.065 bb. The July-to-August futures spread looks to extend the downtrend (strengthening carry) on its weekly close-only chart, sitting at 3 3/4 cents early Friday morning. The new-crop November-to-January is also moving toward support on its weekly close-only chart at a carry of 4 3/4 cents. Delivery of 68 contracts was reported against the May issue, putting the total at 1,163 contracts.

WHEAT The wheat complex was lower early Friday morning, with new-crop July Kansas City (HRW) continuing to test minor (short-term) price support near $5.22 1/2. If the contract can hold this support throughout Friday, or at least stay near, it could spark a retracement rally early next week. Traders will keep an eye on weather forecasts across the winter wheat growing areas, the U.S. Southern Plains (HRW) in particular. The market seems to have grown used to the horror stories regarding crop conditions, as pictures of horrible-looking wheat fields continue to pop up on social media sites. Fundamentally, there is no incentive to get excited about the wheat market in general as export demand remains slower than projected late in the 2017-18 marketing year. No new deliveries were reported against the May Kansas City issue, keeping its total at 862 contracts. Delivery of 41 contracts was reported against the May Chicago issue, putting its total at 41 contracts.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.67 $0.00 -$0.35 Jul $0.005
Soybeans: $9.50 $0.06 -$0.71 Jul $0.002
SRW Wheat: $4.75 -$0.03 -$0.31 Jul $0.006
HRW Wheat: $4.85 -$0.03 -$0.42 Jul $0.011
HRS Wheat: $5.97 -$0.02 -$0.12 Jul $0.002

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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