DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

May corn was 1 cent higher, May soybeans were 2 cents lower, and July Kansas City (HRW) wheat was 1 cent higher.

CME Globex Recap:

The end of March has arrived, bringing with it the triple-witching of the end of the week, month, and quarter. In ag markets, you can also throw in USDA's Quarterly Stocks and Prospective Plantings reports set for release late Friday morning. Ahead of all that most sectors were on the defensive though corn, wheat, and soybean meal were trading higher. Metals were lower again as the U.S. dollar index extended its recent rally overnight while DJIA futures found renewed selling.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 69.17 points (0.3%) higher at 20,728.49. The NASDAQ Composite gained 16.80 points (0.3%) to 5,914.34 and the S&P 500 rallied 6.93 points (0.3%) to 2,368.06 Thursday. DJIA futures were 36 points lower early Friday morning. Asian markets closed mostly lower with Japan's Nikkei down 153.96 points (0.8%), Hong Kong's Hang Seng lost 189.50 points (0.8%), and China's Shanghai Composite up 12.28 points (0.4%). European markets were also mostly lower Friday with London's FTSE 100 down 28.64 points (0.4%), Germany's DAX off 2.10 points, and France's CAC 40 losing 9.03 points (0.2%). The euro was 0.0001 higher at 1.0676 while the U.S. dollar index gained 0.10 to 100.61. June 30-year T-Bonds were 5/32 lower at 150'12 while April gold lost $3.40 to $1,241.60. Crude oil dipped $0.177 to $50.18 while Brent crude slipped $0.29 to $52.67. China's Dalian soybeans saw another solid sell-off overnight while Malaysian palm oil futures were mostly lower.

	BULL		BEAR
1)	Corn's quarterly stocks figure is expected to confirm record first-half demand for the 2016-2017 marketing year.	1)	Corn's quarterly stocks figure is expected to be record large, meaning lots of supply left to move before next harvest.
2)	As with corn, record large Q2 and first-half soybean demand is expected to be confirmed by USDA's Quarterly Stocks report.	2)	Most every factor, both fundamental and technical, are bearish soybeans. New-crop will be anxiously awaiting USDA's acreage number Friday.
3)	Noncommercial short-covering during Friday's triple-witching could provide support to wheat.	3)	Neither quarterly stocks nor prospective plantings are expected to give much of a lift to the wheat complex to close out the month.

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 Corn contracts were showing small gains early Friday, offsetting the equally small lower close from Thursday. Daily charts for both old-crop May and new-crop December continue to show minor (short-term) uptrends, though little buying enthusiasm has been generated this week. While its weekly (secondary) trend remains down, old-crop corn seems to have found equilibrium heading into Friday's USDA Quarterly Stocks report. The average pre-report estimate came in at 8.551 bb, almost guaranteeing corn's Q2 stocks on hand (as of March 1) will be record large. More importantly though a USDA figure somewhere close to that mark will reflect record large Q2 and first-half demand. As for new-crop, the average pre-report estimate for prospective plantings came in at 91 million acres. Anything in the 90 ma to 92 ma could likely be viewed as neutral given it has been discussed since last harvest.

SOYBEANS Soybeans are bearish, both fundamentally and technically, heading into Friday's USDA reports (for further discussion, read this week's Newsom on the Market column "The Black Knight's Dark Thoughts"). Technically signals of a short-term uptrend on daily charts fell apart late this week, the downtrend on weekly charts extended beyond price support, and the market's monthly chart now shows a bearish 4-month breakout. Regarding USDA's Quarterly Stocks report, the average pre-report estimate came in at 1.679 bb. If realized, or even close, it would not be record large and like corn would show record Q2 and first-half demand. However, the carry in the May-to-July futures spread continues to strengthen, reflecting a more bearish commercial view of fundamentals as export demand continues its seasonal slowdown. Meanwhile one private estimate for Brazil's crop grew to 113 million metric tons as opposed to USDA's March WASDE figure of 108 mmt. As for prospective plantings and new-crop soybeans, the average pre-report estimate came in at a benign 88.1 million acres. The risk is USDA coming in above 90 ma in its second first guess at new-crop planted area.

WHEAT Winter wheat contracts were showing small gains early Friday, continuing a pattern seen late this week that hasn't ended well during daily sessions. Thursday saw both Chicago and Kansas City markets close lower as traders pay more attention to recent weather, specifically rains that moved across the U.S. Southern Plains (HRW) and Midwest (SRW) growing areas. Also, the U.S. dollar has strengthened this week against currencies for key competitors (e.g. euro) that casts doubts about increased strength of export demand for U.S. supplies. According to Thursday's weekly Export Sales and Shipments report (as of Thursday, March 23) total shipments of all wheat are running roughly 2 percentage points behind USDA's projected pace with only 9 weeks left in the marketing year. Also, outstanding sales are at nearly 220 mb leaving the door open for rolling from old-crop to new-crop in the near future.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.20	$0.00	-$0.38	May	$0.005
Soybeans:	$8.87	-$0.06	-$0.76	May	$0.004
SRW Wheat:	$3.80	-$0.04	-$0.41	May	$0.004
HRW Wheat:	$3.27	-$0.06	-$0.91	May	$0.003
HRS Wheat:	$5.03	$0.00	-$0.41	May	-$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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