DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

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

CME Globex Recap:

It was wheat's turn to take the bullish baton overnight, with most contracts moving about 3 cents higher through early Wednesday morning. Corn jogged along behind, while soybeans stumbled to a 5-cent loss. Most other commodity markets were lower, pressured again by a stronger U.S. dollar. Meanwhile, the 10-year Treasury yield continues to climb above the 3% level, putting pressure on DJIA futures again.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 193.00 points (0.8%) lower at 24,706.41, the NASDAQ Composite lost 59.69 points (0.8%) (0.1%) to 7,351.63, and the S&P 500 dropped 18.68 points (0.7%) to 2,711.45 Tuesday. DJIA futures were 18 points lower early Wednesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 down 100.79 points (0.4%), Hong Kong's Hang Seng losing 41.83 points (0.1%), and China's Shanghai Composite losing 22.55 points (0.7%). European markets were trading mostly lower with London's FTSE 100 up 2.25 points, Germany's DAX up 27.86 points (0.2%), and France's CAC 40 down 1.93 points. The 10-year Treasury yield was at 3.08% with June 30-year T-Bonds 14/32 higher at 141'16. The euro was 0.0038 lower at 1.1799 as the U.S. dollar index gained 0.16 to 93.44. June gold added $0.30 to $1,290.60 while crude oil slipped $0.02 to $71.29. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.

	BULL		BEAR
1)	National average corn basis firmed again Tuesday evening, despite the strong closing rally by the futures market.	1)	Despite this week's rallies both old-crop July and new-crop December corn contracts remain in minor (short-term) downtrends on daily charts.
2)	July soybeans continue to consolidate near short-term technical price support at $10.13, after posting a bullish signal this past Monday.	2)	Renewed commercial selling was seen in soybeans for much of Tuesday's session, and could return Wednesday.
3)	Weather remains the bullish feature for new-crop winter wheat, particularly the HRW crop.	3)	Long-term bearish fundamentals in wheat continue to keep a lid on possibly buying interest.

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 fractionally higher overnight on light follow-through buying from Tuesday's closing rally. Despite the gains both old-crop July and new-crop December remain in minor (short-term) downtrends on their respective daily charts, with rallies to this point looking like normal Wave Bs (second waves) of 3-wave patterns. However both markets (old-crop and new-crop) have seed commercial support this week, indicated by the slightly weaker carry in the July-to-September and December-to-March futures spreads. Also, national average basis firmed ever so slightly Tuesday evening with the DTN National Corn Index (NCI, national average cash price) gaining roughly another 1/4 cent on the July futures contract. This, combined with Tuesday's action in the July-to-September spread, indicates demand for U.S. supplies remains firm and announcements of new export sales could soon be seen.

SOYBEANS Let's face it, soybeans didn't want to rally Tuesday but only did so because corn drug it along kicking and screaming into the close. Instead the market looked like it wanted to post a double-digit loss Tuesday, with the overnight session through early Wednesday morning finding the market back on that path. That having been said, the old-crop July contract continues to consolidate near minor (short-term) technical price support at $10.13 while its daily stochastics (short-term momentum study) show the contract is trying to build into a new minor uptrend. The initial signal was a bullish outside range this past Monday followed by an inside range Tuesday. If July beans can get above Tuesday's high of $10.25 1/4, it could trigger another round of noncommercial buying.

WHEAT The wheat complex was higher early Wednesday with July Kansas City (HRW) near its session high. As has been discussed the last few days, July KC is holding near minor (short-term) technical support at $5.11 1/2, trying to build enough bullish momentum to recover some of the sharp, recent sell-off from its high of $5.68 1/2. Temperatures across the U.S. Southern Plains growing area have turned summer-like with highs Wednesday expected to climb back well into the 80's. Meanwhile, there hasn't been a lot of rain over the western half of the Southern Plains this week to alleviate the dry pattern the wheat crop faces. Despite all this, July KC has had trouble finding buying interest, particularly from commercial traders. The July-to-September futures spread continues to sit near the 19-cent carry mark with the recent low being 20 1/2 cents and a high of 17 1/4 cents.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.68	$0.06	-$0.34	Jul	$0.002
Soybeans:	$9.49	$0.02	-$0.69	Jul	$0.009
SRW Wheat:	$4.63	$0.02	-$0.31	Jul	$0.002
HRW Wheat:	$4.69	$0.01	-$0.41	Jul	$0.010
HRS Wheat:	$5.95	$0.05	-$0.11	Jul	$0.005

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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