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

CME Globex Recap:

Tuesday afternoon's news that the U.S./North Korea (Little China) summit planned for later this summer was likely not going to happen, something that should've surprised no one, seems to have sent a ripple of uncertainty through global stock markets. First the Dow closed almost 180 points lower Tuesday, followed by a 200 point sell-off by DJIA futures overnight. Pressure spilled over into grains, a bit, aided by better weather over parts of the U.S. growing areas.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 178.88 points (0.7%) lower at 24,834.41, the NASDAQ Composite lost 15.58 points (0.2%) to 7,378.46, and the S&P 500 fell 8.57 points (0.3%) to 2,734.44 Tuesday. DJIA futures were 208 points lower early Wednesday morning. Asian markets closed lower with Japan's Nikkei 225 down 270.60 points (1.2%), Hong Kong's Hang Seng falling 568.71 points (1.8%), and China's Shanghai Composite losing 45.39 points (1.4%). European markets were trading lower with London's FTSE 100 down 57.32 points (0.7%), Germany's DAX down 209.12 points (1.6%), and France's CAC 40 down 67.85 points (1.2%). The euro was 0.0052 lower at 1.1728 as the U.S. dollar index gained 0.25 to 93.84. The 10-year Treasury yield was 3.065% with June 30-year T-Bonds 27/32 higher at 142'03. June gold gained $4.40 to $1,296.40 while crude oil dropped $0.45 to $71.75. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.

	BULL		BEAR
1)	December corn posted a new high for this move of $4.25 during Tuesday's rally.	1)	Old-crop July corn could see light noncommercial selling interest throughout the day if the DJIA posts a sharp sell-off.
2)	As of the latest headlines, the trucker strike continues in Brazil bringing interest back to U.S. soybean supplies.	2)	According to the U.S. President, a summer summit between the U.S. and North Korea is now in doubt, possibly creating a ripple of concern in soybeans.
3)	July Kansas City wheat posted a bullish outside day Tuesday.	3)	HRW wheat harvest will be rolling soon in far southern Texas, possibly putting more commercial pressure on the market.
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MORE COMMODITY-SPECIFIC COMMENTS

CORN Corn contracts were showing small losses early Wednesday morning. Technically, one could make the argument that the old-crop July contract remains in a minor (short-term) downtrend since it hasn't taken out its previous high of $4.08 1/4 yet. On the other hand the contract has held support at the interim low of $3.94 1/4 for the last couple of weeks. If the market is to make a move Wednesday, the most logical would be a bullish breakout of the previous high. However, that possibility is only slightly more likely than a fall below the previous low, meaning the contract probably won't do much over the course of the day. AS for new-crop December, it posted a new high for this move of $4.25 Tuesday before pulling back slightly. Traders should continue to monitor weather developments as Wednesday progresses.

SOYBEANS Perhaps it was the realization that China dropped the threat of tariffs it was never going to impose on imports of U.S. soybeans, or maybe the market was just tired after this week's early rally. Whatever the cause, contracts fell back from Tuesday's high leading to light follow-through pressure overnight. It's also possible the ever evolving but not really changing relationship between the United States and North Korea, with China being a key player, has soybeans on the defensive early Wednesday following all the chatter regarding the unlikelihood now of a U.S./North Korea summit this summer. Or, maybe this is just another case of the U.S. President saying things just to see how markets react. In real news, Brazilian truckers remain on strike moving interest back to U.S. supplies. This could continue to support the old-crop market while new-crop traders keep a close eye on weather developments.

WHEAT Market technicians have either lost sleep over recent activity by the July Kansas City contract, or just chalked it up to wheat being wheat. Monday saw the contract post a new high for this rally before falling sharp double-digits. Tuesday saw the contract take out the previous day's low before racing to a 20-plus cent gain, creating an outside range, then giving back a third of those gains shortly before the close. Despite the late sell-off the contract still closed higher for the day, creating a bullish outside day that naturally led to renewed overnight selling, or the opposite of what a normal market would likely do. The bottom line is that July KC wheat remains in a minor (short-term) downtrend on its daily chart and the last couple of days hasn't changed that. Sellers could be looking at HRW harvest on the horizon, likely to start soon in far southern Texas. The stronger U.S. dollar index could keep light pressure on the wheat complex Wednesday.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.71	$0.02	-$0.34	Jul	-$0.001
Soybeans:	$9.63	$0.06	-$0.68	Jul	$0.004
SRW Wheat:	$4.91	$0.14	-$0.31	Jul	-$0.001
HRW Wheat:	$5.03	$0.15	-$0.38	Jul	$0.010
HRS Wheat:	$6.22	$0.11	-$0.11	Jul	$0.002

Darin Newsom can be reached at darin.newsom@dtn.com

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