DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 3 cent higher, July soybeans were 10 cents higher, and July Kansas City (HRW) wheat was 9 cents higher.

CME Globex Recap:

Overnight trade into early Thursday morning saw soybeans continue to roll higher, with contracts posting double-digit gains. Corn followed along, at a distance, as it continues to build bullish momentum. Wheat also showed a solid rally on what looked to be commercial buying interest, holding contracts near session highs. Outside markets were quieter than 24 hours ago with the U.S. dollar index lower and DJIA futures showing little movement.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 52.40 points (0.2%) higher at 24,886.81, the NASDAQ Composite gained 47.50 points (0.6%) to 7,425.96, and the S&P 500 rallied 8.85 points (0.3%) to 2,733.29 Wednesday. DJIA futures were 1 point lower early Thursday morning. Asian markets closed mixed with Japan's Nikkei 225 down 252.73 points (1.1%), Hong Kong's Hang Seng up 94.77 points (0.3%), and China's Shanghai Composite down 14.31 points (0.4%). European markets were trading mostly higher with London's FTSE 100 off 6.07 points, Germany's DAX gaining 22.80 points (0.2%), and France's CAC 40 adding 26.92 points (0.4%). The euro was 0.0027 higher at 1.1725 as the U.S. dollar index lost 0.17 to 93.77. The 10-year Treasury yield was 3.003% with June 30-year T-Bonds 4/32 lower at 142'03. June gold gained $5.80 to $1,295.40 while crude oil dropped $0.48 to $71.36. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

	BULL		BEAR
1)	Major (long-term) uptrends in corn markets (futures, cash) continue to set the day-to-day tone.	1)	The long-term pattern is for strong rallies in corn to be met with stronger reversals the following month.
2)	The ongoing trucker strike in Brazil and headlines of a port strike in Argentina are keeping buyers interested in the old-crop soybean market.	2)	Total marketing year export shipments of U.S. soybeans are expected to still be running well behind pace in Thursday's weekly update.
3)	Weather, weather everywhere has wheat bulls on the move.	3)	HRW wheat harvest will be rolling soon in far southern Texas.

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 July corn followed Wednesday's pop to a new high (for this move) of $4.09 by rallying to $4.12 (so far) overnight through early Thursday morning. The market is starting to act similar to crude oil in that short-term, and even intermediate-term, technical signals are being overridden by long-term trends. On the market's monthly chart the July contract is testing the $4.13 1/2 high from May 2016, with the next mark the June 2015 peak of $4.22. It's interesting to note that both those months were followed by sharp bearish reversals. As for the DTN National Corn Index (NCI, national average cash price), it was calculated at $3.74 1/2 Wednesday evening, putting it at its highest level since June 2016. As for Thursday's session, look for corn to stay well supported by spillover buying from soybeans as well as continued noncommercial interest.

SOYBEANS The most telling factor in the soybean market is the continued weakening of the carry in the new-crop November-to-January futures spread. This carry is sitting at 3 cents early Thursday morning after holding support at 4 3/4 cents on its weekly close-only chart the week of May 7. The key now is what happens as the spread gets closer to the previous peak of 2 1/4 cents. A move beyond that mark would suggest a growing concern over new-crop supply and demand, possibly enough to lift the November contract well beyond the recent high of $10.60 on its weekly chart. On the other hand, if the spread starts to show strengthening carry again, traders will be indicating less concern over new-crop fundamentals. Look for the market to stay strong Thursday as buyers continue to roll into the market.

WHEAT July Kansas City (HRW) wheat continues to extend its rally, easily taking out Wednesday's high of $5.53 overnight through early Thursday morning as it hit $5.61. Next resistance on the contract's daily chart is the previous high of $5.68 1/2 from May 3. There seems to be more fundamentally bullish news brewing this week, with the common denominator weather. Now Russia and Australia are being mentioned as seeing less than ideal conditions for their respective crops. On the bearish side of the ledger, HRW harvest should start here soon in far southern Texas giving the market an early glimpse of how badly damaged yields may be. Wheat should stay well supported over the course of Thursday's session, particularly if the U.S. dollar index stays under light pressure.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.75	$0.04	-$0.34	Jul	$0.003
Soybeans:	$9.73	$0.10	-$0.67	Jul	$0.008
SRW Wheat:	$5.01	$0.10	-$0.30	Jul	$0.009
HRW Wheat:	$5.14	$0.12	-$0.37	Jul	$0.004
HRS Wheat:	$6.30	$0.08	-$0.12	Jul	-$0.010

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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