DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 5 cents higher, July soybeans were 10 cents higher, and July Kansas City (HRW) wheat was 9 cents higher.

CME Globex Recap:

Late Thursday brought more rumblings of a trade deal being made with China, including no tariffs against U.S. agricultural commodities and the return of anti-dumping fees already levied against grain sorghum. Of course the U.S. President denied it, making the situation all the more likely. Overnight trade in grain and oilseeds indicates something may actually be brewing with strong rallies seen in soybeans, corn, and wheat.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 54.95 points (0.2%) lower at 24,713.98, the NASDAQ Composite lost 15.82 points (0.2%) to 7,382.47, and the S&P 500 dipped 2.33 points (0.1%) to 2,720.13 Thursday. DJIA futures were 81 points higher early Friday morning. Asian markets closed mostly higher with Japan's Nikkei 225 up 91.99 points (0.4%), Hong Kong's Hang Seng gaining 105.76 points (0.3%), and China's Shanghai Composite up 39.02 points (1.2%). European markets were trading mostly higher with London's FTSE 100 up 2.84 points, Germany's DAX up 3.19 points, and France's CAC 40 gaining 20.90 points (0.4%). The 10-year Treasury yield was at 3.109% with June 30-year T-Bonds 4/32 higher at 140'18. The euro was 0.0010 lower at 1.1784 as the U.S. dollar index gained 0.13 to 93.60. June gold lost $3.30 to $1,286.10 while crude oil added $0.10 to $71.59. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

	BULL		BEAR
1)	Rumor has it a trade deal has been reached between the U.S. and China that includes the return of anti-dumping fees already levied against corn's country cousin grain sorghum.	1)	If the latest rumor proves to be untrue, weekend weather looks favorable for new-crop corn across the U.S. Midwest.
2)	Rumor has it a trade deal has been reached between the U.S. and China that would do away with threatened tariffs on soybeans imported from the U.S.	2)	If the latest rumor proves to be untrue, soybeans could get hit by heavy selling before the end of the day, similar to what was seen Monday.
3)	Rumor has it a trade deal has been reached between the U.S. and China meaning spillover buying from the other grains could support wheat Friday	3)	If the latest rumor proves to be untrue, wheat is still wheat, meaning its long-term fundamental picture is bearish.

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 The corn market seemed to like the news, or at least the rumor that a trade deal with China was near complete. The old-crop July contract nearly equaled all of Thursday's range during the overnight session, sitting 5 cents higher early Friday. As always, it's too early in the day to tell if actual commercial buying provided support, so keep an eye on the July-to-September futures spread as Friday progresses. As for national average basis, the DTN National Index (NCI, national average cash price) gained about 1/4 cent on the July futures contract Thursday, and has gained a penny on the futures market over the course of the week. Technically, the new-crop December contract is in position to establish a bullish outside range on its daily chart, a move that could spark increased buying interest heading into the weekend.

SOYBEANS As discussed in Thursday's Closing Comments and Closing Video on DTN, July soybeans had an interesting settlement that kept the contract from posting another bearish technical signal. Instead, July beans finished back above short-term technical price support, and given daily stochastics (short-term momentum study) were showing an oversold situation, the contract was in position to start a new minor (short-term) uptrend. That spark seems to be the news, or at least the newest rumor of a trade deal being done with China. Contracts, both old-crop and new-crop, posted double-digit gains during the overnight session, hinting at renewed support from commercial buying. At current carry levels the old-crop July-to-August futures spread is covering a neutral level of calculated full commercial carry while the new-crop November-to-January remains bullish. For further discussion on soybeans, see this week's Newsom On the Market column that will be posted on DTN subscription sites later Friday morning.

WHEAT The wheat complex traded higher overnight into Friday morning, once again led by the July Kansas City (HRW) contract. Though July KC would still be classified as in a minor (short-term) downtrend on its daily chart, thee contract held support near $5.06 3/4 and should now see a rally phase (Wave B, second wave) of its 3-wave downtrend. This puts the next upside target at $5.35 1/2, then possibly all the way to $5.46 3/4 before early harvest selling reemerges. Weekend weather forecasts look to be a bullish factor, with little meaningful rain expected across much of the U.S. Southern Plains. Also, look for spillover buying from soybeans and corn tied to rumblings of a trade deal done with China to provide support over the course of Friday's session.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.61	-$0.04	-$0.34	Jul	$0.003
Soybeans:	$9.27	-$0.04	-$0.68	Jul	$0.008
SRW Wheat:	$4.66	$0.03	-$0.31	Jul	-$0.003
HRW Wheat:	$4.80	$0.05	-$0.39	Jul	$0.003
HRS Wheat:	$6.03	$0.03	-$0.11	Jul	-$0.001

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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