DTN Early Word Grains
Buyers Back in Wheat Early Thursday
July corn was 2 cents higher, July soybeans were 6 cents higher, and July Kansas City (HRW) wheat was 11 cents higher.
CME Globex Recap:Kansas City wheat roared higher overnight into early Thursday morning on what looked to be increased commercial buying interest. Soybeans followed, erasing some of Wednesday's sharp loss while corn trailed behind. The U.S. dollar index and DJIA futures were both quiet overnight as gold moved lower and crude oil rallied.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 62.52 points (0.2%) higher at 24,768.93, the Nasdaq Composite gained 46.67 points (0.6%) to 7,398.30, and the S&P 500 added 11.01 points (0.4%) to 2,722.46 Wednesday. DJIA futures were 1 point higher early Thursday morning. Asian markets closed mostly lower with Japan's Nikkei 225 up 121.14 points (0.5%), Hong Kong's Hang Seng down 168.05 points (0.5%), and China's Shanghai Composite off 15.28 points (0.5%). European markets were trading mostly higher with London's FTSE 100 up 7.81 points (0.1%), Germany's DAX up 44.66 points (0.3%), and France's CAC 40 gaining 28.44 points (0.5%). The 10-year Treasury yield was at 3.095% with June 30-year T-Bonds 4/32 lower at 140'26. The euro was 0.0008 lower at 1.1799 as the U.S. dollar index gained 0.12 to 93.44. June gold lost $4.70 to $1,286.80 while crude oil added $0.57 to $72.06. China's Dalian soybean futures were mixed and Malaysian palm oil futures were higher overnight.
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| BULL | BEAR | ||
| 1) | The corn market is anticipating another large weekly export shipment number in Thursday's update. | 1) | Technically, both old-crop July and new-crop December corn remain in minor (short-term) downtrends. |
| 2) | The July soybean contract is in position to turn the minor (short-term) trend up on its daily chart. | 2) | Total export shipments of soybeans are expected to still be running behind projected pace. |
| 3) | Winter wheat, Kansas City in particular, posted a strong rally overnight that could carry over through much of Thursday's session. | 3) | The overall pace of wheat exports are expected to be disappointing, with time running out on this marketing year. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Corn contracts were a couple cents higher overnight on spillover buying from wheat. The market hasn't done anything spectacular, technically, with old-crop July still sitting within Wednesday's range. Indicators still show the contract to be in a minor (short-term) downtrend, though support at $3.96 1/2 has held most of the sell-off to this point. Fundamentally, traders are anticipating another solid weekly export shipment number (for the week ending Thursday, May 10) given this past Monday's weekly export inspection figure (for the same time frame) came in at 61.2 million bushels (mb). As for the new-crop December contract, traders will continue to keep an eye on weather forecasts with another weekend on the horizon.
SOYBEANS July soybeans posted an overnight low of $9.98 before rallying on spillover buying from the wheat complex. Was this close enough to projected short-term technical support at $9.94 3/4 to call it a test? The reaction of the market certainly seems to think so. The mentioned price is the 76.4% retracement level of the previous minor (short-term) uptrend from $9.65 1/4 through the high of $10.90 1/4. With daily stochastics (short-term momentum study) below the oversold level of 20%, the market is in position to make a bullish turn to a new minor uptrend. However, don't look for a lot of support to come from the commercial side of the market as the July-to-August futures spread remains in a downtrend (strengthening carry) on its weekly close-only chart. Weekly export shipments aren't expected to change the demand narrative much following this past Monday's weekly inspection number of 25.3 mb.
WHEAT July Kansas City wheat is finally getting its expected technical bounce as the contract posted a strong double-digit rally overnight into early Thursday morning. The last few session have seen July KC test support on its daily chart near $5.06 3/4, a price that marks the 67% retracement level of the previous minor (short-term) uptrend from $4.76 1/4 through the high of $5.68 1/2. This move, what could be considered Wave B (second wave) of a 3-wave downtrend, has already crossed initial resistance near $5.24 1/4 and should next target $5.35 1/2. The latter price marks the 50% retracement level of Wave A (first wave) from the previous high through this past Tuesday's low of $5.02 1/2. Fundamentally, the story remains the same with expected production of HRW wheat across the U.S. Southern Plains seemingly trimmed every day by another hail storm somewhere. Despite this, the carry in the Kansas City July-to-September futures spread remains near 18 cents.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.65 | -$0.03 | -$0.34 | Jul | $0.001 |
| Soybeans: | $9.31 | -$0.18 | -$0.69 | Jul | $0.006 |
| SRW Wheat: | $4.63 | $0.00 | -$0.31 | Jul | -$0.002 |
| HRW Wheat: | $4.74 | $0.05 | -$0.40 | Jul | $0.012 |
| HRS Wheat: | $6.00 | $0.05 | -$0.11 | Jul | -$0.002 |
Darin Newsom can be reached at darin.newsom@dtn.com
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