DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

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

CME Globex Recap:

Markets were quiet overnight into Tuesday morning, with grain traders waiting on the release of USDA's latest monthly supply and demand numbers later in the morning (11 CDT). Softs were higher across the board led by continued commercial buying in cotton ahead of USDA. Outside markets were mixed with energies and metals reversing course from Monday; energies were mostly lower and metals higher. Other turnarounds, at least from 24 hours ago, were the U.S. dollar index (lower) and DJIA futures (higher).

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 1.92 points higher at 20,658.02. The NASDAQ Composite gained 3.11 points to 5,880.93 and the S&P 500 added 1.62 points to 2,357.16 Monday. DJIA futures were 1 point higher early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei down 50.01 points (0.3%), Hong Kong's Hang Seng down 173.72 points (0.7%), and China's Shanghai Composite up 19.57 points (0.6%). European markets were mixed Tuesday with London's FTSE 100 rallying 50.09 points (0.7%), Germany's DAX off 7.80 points, and France's CAC 40 up 3.16 points. The euro was 0.0022 higher at 1.0618 while the U.S. dollar index lost 0.19 to 100.82. June 30-year T-Bonds were 7/32 higher at 152'00 while June gold rallied $5.10 to $1,259.00. Crude oil was $0.08 lower at $53.00 while Brent crude slipped $0.07 to $55.91. China's Dalian soybean futures were mostly lower while Malaysian palm oil futures were mostly higher overnight.

	BULL		BEAR
1)	Based on total marketing year export shipments, corn ending stocks could be decreased in Tuesday's USDA Supply and Demand reports.	1)	Based on March 31 Quarterly Stocks, corn ending stocks could be increased in Tuesday's USDA Supply and Demand reports.
2)	Based on total marketing year export shipments, soybean ending stocks could be decreased in Tuesday's USDA Supply and Demand reports.	2)	Based on March 31 Quarterly Stocks, soybean ending stocks could be increased in Tuesday's USDA Supply and Demand reports.
3)	Sub-freezing temperatures were seen across parts of the U.S. Plains wheat growing area Tuesday morning.	3)	Both domestic and world ending stocks of wheat are expected to be increased in Tuesday's USDA reports.

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MORE COMMODITY-SPECIFIC COMMENTS

CORN Once again corn spent most of the overnight session sleeping, with both old-crop May and new-crop December posting trading ranges of less than 2 cents through early Tuesday morning. The minor (short-term) trend of both is up heading into Tuesday's USDA reports, possibly hinting at a bullish reaction. As for the numbers themselves, pre-report estimates didn't hint at much bullishness with U.S. ending stocks expected to grow slightly and Brazilian production estimates to increase from March. As discussed in the report preview (Confounded Demand), the key will be how USDA decided to approach the demand issue for corn. Any of the three ways (increase estimate, decrease estimate, unchanged) could be argued by looking at the numbers heading into the report, with the most logical staying unchanged until next month when world traders are focused on USDA's third "initial" look at 2017-2018 steals the spotlight.

SOYBEANS Soybean contracts were higher early Tuesday morning, again hinting at possible short-term uptrends on daily charts. However, the same thing was said before Monday's session when the market failed to hold an early rally and drifted lower at the close. As with corn, soybean traders could decide to sit on the sidelines until the release of USDA's monthly supply and demand numbers, a set that is expected to be bearish across the board for the bean complex. First, U.S. ending stocks are expected to increase, an idea that is in line with what was seen in the March 31 Quarterly Stocks report (stocks on hand as of March 1). Second, Brazil's big crop is expected to get bigger, with the average pre-report estimate for USDA's projection (an important distinction from what's really expected) coming in at 110 mmt as compared to last month's 108 mmt. However, local (Brazilian) estimates have been running between 112 mmt and 114 mmt, raising the question of how do global traders react if USDA comes in at 111 mmt?

WHEAT Winter wheat contracts were lower early Tuesday morning, showing no reaction to sub-freezing temperatures in the U.S. Plains dipping as far south as northern Kansas. In fact, new-crop July Kansas City wheat led the way lower, showing a loss of 2 1/2 cents. It's possible low volume played a role in the overnight malaise, with a stronger reaction likely after the open of Tuesday's session. As for USDA's monthly supply and demand numbers, wheat is expected to see more of the same meaning a slight increase in both domestic and world ending stocks.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.30	$0.08	-$0.37	May	$0.006
Soybeans:	$8.67	-$0.01	-$0.75	May	-$0.003
SRW Wheat:	$3.88	$0.05	-$0.41	May	-$0.002
HRW Wheat:	$3.34	$0.04	-$0.91	May	$0.004
HRS Wheat:	$4.79	$0.01	-$0.41	May	$0.002

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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