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 3 cents higher, and July Kansas City (HRW) wheat was 3 cents lower.

CME Globex Recap:

Grains were lower early Monday as corn and wheat were pressured by follow-through selling from last week overnight. The Kansas City (HRW) wheat market was near session lows to start the day. On the other hand, soybeans were higher after trading either side of unchanged. Energies were also mostly lower, as were metals. The U.S. dollar index was down again while DJIA futures continued to rally.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 91.64 points (0.4%) higher at 24,831.17, the NASDAQ Composite slipped 2.09 points lower to 7,402.88, and the S&P 500 added 4.65 points (0.2%) to 2,727.72 Friday. DJIA futures were 90 points higher early Monday morning. Asian markets closed mostly higher with Japan's Nikkei 225 up 107.38 points (0.5%), Hong Kong's Hang Seng gaining 419.02 points (1.4%), and China's Shanghai Composite adding 10.77 points (0.3%). European markets were trading mostly lower with London's FTSE 100 down 5.20 points, Germany's DAX off 21.18 points (0.2%), and France's CAC 40 down 8.44 points (0.2%). The euro was 0.0032 higher at 1.1973 as the U.S. dollar index lost 0.16 to 92.39. June 30-year T-Bonds were 12/32 lower at 142'24 while June gold dropped $0.60 to $1,320.10. Crude oil was $0.19 lower at $70.51 while Brent crude dipped $0.18 to $76.94. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	National average corn basis firmed another penny last week, hinting at the possibility of another solid weekly export inspection number Monday.	1)	The slightly stronger national average corn basis paled in comparison to the sell-off seen in the futures market last week.
2)	November soybeans are holding short-term technical support, hinting at a possible bullish change in minor trend.	2)	The carry in the old-crop July-to-August futures spread continues to strengthen, reflecting a less bullish/more bearish fundamental situation.
3)	Once again, July KC wheat is testing short-term technical price support on its daily chart.	3)	Some winter wheat growing areas saw rain over the weekend.

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 Monday morning, maintaining short-term downtrends on daily charts. However, old-crop July could be nearing an end to its move as it works toward a test of minor support near $3.90 3/4. This price marks the 50% retracement level of the previous uptrend from $3.77 1/2 through the high of $4.08 1/4. Fundamentally the market is expecting another solid weekly export inspection number (for the week ending Thursday, May 10), possibly not as large as the previous week's though. The DTN National Corn Index (NCI, national average cash price) was calculated at $3.61 1/2 last Friday, putting it 35 cents under the close of the July contract. The 1 cent gain in basis was likely a result of the July contract losing 9 3/4 cents for the week. As for the NCI itself, cash corn is poised to establish an island top on its weekly chart, a pattern that would suggest it is moving into a secondary (intermediate-term) downtrend (for more information, see this weekend's update of DTN's Technically Speaking blog). Delivery of 248 contracts was reported against the May issue, putting the total at 2,933 contracts.

SOYBEANS Soybean contracts were able to rally overnight into early Monday morning, gaining back a small part of last week's losses. Both Friday and the overnight session saw new-crop November test minor (short-term) price support on its daily chart at $10.13 3/4 and hold. Daily stochastics (short-term momentum study) show the contract to be in an oversold situation, meaning it could start to find increased buying interest. However, if commercial selling materializes over the course of the session and this support gives way, next support is near $10.02 3/4. Fundamentally the old-crop market is expecting another so-so weekly export inspection number (for the week ending Thursday, May 10) late Monday morning. Last week saw the carry in the July-to-August futures spread strengthen to 4 cents while national average basis (DTN National Soybean Index minus the July futures contract) firm 2 cents to 71 cents under, mostly as a result of the July contract losing 33 1/2 cents for the week. Delivery of 64 contracts was reported against the May issue, putting the total at 1,227 contracts.

WHEAT The wheat complex was lower early Monday, once again led by winter markets. Parts of the U.S. Southern Plains (HRW) and Midwest (SRW) growing areas saw rain over the weekend, putting pressure on July Kansas City and Chicago contracts respectively. As for the July KC issue, the overnight sell-off has it in position to test next minor (short-term) technical price support on its daily chart at $5.11 1/2. If it can hold this support through Monday's session, it's possible the contract could rally Tuesday on continued crop condition concerns. Fundamentally, demand for U.S. wheat is lackluster with national average SRW basis running near its 5-year average and national average HRW basis slightly better than its 5-year average. The exception is seen in spring wheat where national average basis is running stronger than the 5-year highs. Delivery of 19 contracts was reported against the May Kansas City issue, putting its total at 881 contracts. Delivery of 10 contracts was reported against the May Chicago issue, putting its total at 51 contracts.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.61	-$0.06	-$0.35	Jul	-$0.003
Soybeans:	$9.33	-$0.18	-$0.71	Jul	$0.005
SRW Wheat:	$4.67	-$0.09	-$0.32	Jul	-$0.008
HRW Wheat:	$4.76	-$0.09	-$0.42	Jul	$0.001
HRS Wheat:	$5.93	-$0.04	-$0.12	Jul	$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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