DTN Early Word Grains

6:00 a.m. CME Globex:

July corn was down 2 3/4 cents, July soybeans were unchanged, and July Kansas City (HRW) wheat was down 7 1/2 cents.

CME Globex Recap:

It did not take long for China to respond to Friday's new tariffs with $34 billion of their own new tariffs, which include a 25% penalty on U.S. soybean imports. Stock markets are mostly lower around the globe, the U.S. dollar index is slightly lower, and outside commodities are mixed while grains are starting the week mostly lower.

OUTSIDE MARKETS:

Friday's trading saw the Dow Jones Industrial Average drop 84.83 points to 25,090.48 while the S&P 500 was down 2.83 points to 2,779.66, while the 10-year Treasury yield ended at 2.92%. Early Monday, DJIA futures were down 176 points. Asian markets were lower with Japan's Nikkei 225 down 171.42 points -0.7%) and China's Shanghai Composite on holiday. European markets were also lower with London's FTSE 100 down 12.81 points (-0.2%), Germany's DAX down 132.52 points (-1.0%), and France's CAC 40 down 51.19 points (-0.9%). The euro was down 0.0009 and the U.S. dollar index was down 0.05 to 94.74. June 30-year T-Bonds were up 5/32nds while August gold was up $4.50 to $1,283.00 and August crude oil was down $0.34 at $64.51. China's Dalian Exchange was closed Monday and Malaysian palm oil futures were down 1.2%.

	BULL		BEAR
1)	USDA's lower estimate of world ending corn stocks estimate looks reasonable in spite of the low U.S. crop estimate.	1)	In spite of three weeks of sharply lower corn prices, noncommercials have been slow to liquidate long positions.
2)	Bullish arguments for soybeans have come down to hoping for a hot and dry U.S. summer.	2)	China's new 25% tariff on U.S. soybeans adds to the bearishness and more rain is expected across the Midwest this week.
3)	The forecast for southern Russia is still mostly dry, but may not be enough to support wheat prices.	3)
4)		4)

MORE COMMODITY-SPECIFIC COMMENTS

CORN July corn is down 2 3/4 cents early Monday, still under pressure after the northern Plains received beneficial rain over the weekend. Temperatures were hot over the weekend for the central and western Corn Belt, but crop ratings are likely to be high again in Monday afternoon's Crop Progress report. The seven-day forecast expects heavy rain amounts in the western Corn Belt and more moderate amounts in the eastern Corn Belt, all of which should keep the outlook for crop conditions mostly favorable in June. Technically, July corn is trading at new contract lows while December corn challenges its 2018 low of $3.79 1/4. Both trends are down.

SOYBEANS July soybeans are steady early in spite of Saturday's announcement from China that $34 billion of new tariffs will be enacted against U.S. goods on July 6, including a 25% tariff on U.S. soybeans. The retaliatory tariff was widely expected after the U.S. announced $50 billion of new tariffs against China on Friday and so the market may be excused for not trading lower early Monday, but this continues to be a bearish summer for soybean prices so far with early crop conditions looking favorable and the world's largest soybean buyer avoiding the U.S. Since late May, this market has had no bullish arguments to counter numerous bearish concerns and the result has been one-way selling, a dangerous and potentially volatile dynamic for soybean prices. For now, the trend remains down with July soybeans challenging the 2017 low of $9.00 for spot prices.

WHEAT July K.C. wheat is down 7 1/2 cents early after the Texas Panhandle got some rain over the weekend, even if it wasn't a very large area. The western Plains are expecting more rain this week from South Dakota to Oklahoma with heavier amounts disrupting harvest in Nebraska. Montana's spring wheat crop is also expected to benefit from rain this week, helping keep spring wheat conditions high. Outside of North America, southern Russia remains the only significant concern of dryness after Ukraine received rain last week. Technically, the trend in July K.C. wheat remains choppy to higher with important support at the May low of $5.02 1/2. The weekly stochastic is showing a bearish change in momentum that coincides with seasonal highs that typically arrive around early July.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.31	-$0.02	-$0.30	Jul	$0.000
Soybeans:	$8.43	-$0.21	-$0.63	Jul	$0.004
SRW Wheat:	$4.77	-$0.01	-$0.23	Jul	$0.006
HRW Wheat:	$5.10	-$0.02	-$0.10	Jul	$0.006
HRS Wheat:	$5.56	-$0.07	-$0.15	Jul	$0.002

Todd Hultman can be reached at todd.hultman@dtn.com

Todd can be followed throughout the day on Twitter @ToddHultman1

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