DTN Early Word Grains

Another Wild Weekend

6:00 a.m. CME Globex:

July corn was 3 cents higher, July soybeans were 18 cents higher, and July Kansas City (HRW) wheat was 4 cents higher.

CME Globex Recap:

Soybeans rocketed higher at the sound of the opening bell Sunday evening, sparked by weekend headlines that trade agreements between the United States and China were near. Most important to the soybean market was the removal of possible import tariffs by China. While nothing absolute or official was announced, DJIA futures also jumped an early 200 points. Meanwhile, gold was lower again.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 1.11 points higher at 24,715.09, the NASDAQ Composite lost 28.13 points (0.4) to 7,354.34, and the S&P 500 dipped 7.16 points (0.3%) to 2,712.97 Friday. DJIA futures were 228 points higher early Monday morning. Asian markets closed mostly higher with Japan's Nikkei 225 up 72.01 points (0.3%), Hong Kong's Hang Seng gaining 186.44 points (0.6%), and China's Shanghai Composite up 20.54 points (0.6%). European markets were trading mostly higher with London's FTSE 100 up 66.87 points (0.8%), Germany's DAX down 36.89 points (0.3%), and France's CAC 40 gaining 37.80 points (0.7%). The 10-year Treasury yield was at 3.067% with June 30-year T-Bonds 2/32 lower at 141'04. The euro was 0.0024 lower at 1.1747 as the U.S. dollar index gained 0.25 to 93.91. June gold lost $8.00 to $1,283.30 while crude oil added $0.11 to $71.39. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

BULL BEAR
1) Corn is expected to see another bullish weekly export inspection number in Monday's update. 1) If soybeans come under pressure when trade reality sets in Monday, corn could follow.
2) Soybeans jumped at the prospect of a trade agreement between the U.S. and China overnight, like a yo-yo on a string. 2) China didn't agree to anything, at least as of reported early Monday morning, that it already was or wasn't going to do anyway in regards to U.S. soybeans.
3) July Kansas City wheat extended the second wave of its 3-wave downtrend to test resistance during the overnight session. 3) July Kansas City testing resistance means the second wave of the 3-wave downtrend should be nearing its end, to be followed by the next wave down to new lows.

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 Spillover support from soybeans, tied to the U.S./China trade headlines over the weekend, helped corn contracts leave bullish price gaps on weekly charts overnight into early Monday morning. This means the overnight low was higher than last week's high (e.g. December corn: $4.22 1/2 versus $4.21 1/2). This changes the look of December corn's weekly chart, as the contract also moved to a new high for this rally of $4.24 3/4, setting the stage for an assault on the previous high of $4.29 1/2 (week of July 10, 2017). Fundamentally the new-crop market remains neutral, though the December-to-March futures spread continues to show a weakening carry. As for old-crop, traders are anticipating another solid weekly export inspection number (for the week ending Thursday, May 17) in Monday morning's update.

SOYBEANS Soybean contracts jumped on the open of Sunday night trade with old-crop July rallying as much as 23 cents before things calmed down a bit. Weekend headlines that China would import more ag commodities and energies at first glance seems bullish, but in the big picture only makes sense given the weather-reduced crop in Argentina. The new-crop soybean market has had this calculated in for quite some time with the November-to-January futures spread still showing a weak carry, covering a bullish 31% of calculated full commercial carry. Technically the overnight rally didn't change much for either the old-crop or new-crop markets, with both July and November still within last week's trading ranges. Weekly export inspections (for the week ending Thursday, May 17) aren't expected to be outstanding for soybeans, hinting at a continued slower than projected pace of export demand for 2017-2018. The market will also keep an eye out for more export sales news, either sales or cancelations similar to what was seen late last week.

WHEAT The wheat complex was higher overnight into Monday morning with the July Kansas City contract testing minor (short-term) resistance at $5.46 3/4 with its session high of $5.46. The former price marks the 67% retracement level of the previous sell-off from $5.68 1/2 through last week's low of $5.02 1/2, a logical stopping point for what looks to be Wave B (second wave) of the contract's ongoing 3-wave downtrend. Parts of the U.S. Southern Plains saw rains this past weekend though for much of the crop it is too little, too late. Still, harvest will start to roll in far southern Texas soon bringing new-crop bushels into a market already struggling to find demand. Monday's weekly export inspection update (for the week ending Thursday, May 17) isn't expected to change the overall outlook for wheat in general.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.68 $0.07 -$0.34 Jul -$0.003
Soybeans: $9.30 $0.03 -$0.68 Jul -$0.004
SRW Wheat: $4.87 $0.21 -$0.31 Jul -$0.002
HRW Wheat: $4.99 $0.20 -$0.39 Jul -$0.001
HRS Wheat: $6.18 $0.15 -$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

(KR)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]