DTN Early Word Grains

Following a Familiar Path

6:00 a.m. CME Globex:

May corn was fractionally higher, May soybeans were 4 cents lower, and July Kansas City (SRW) wheat was 1 cent higher.

CME Globex Recap:

Wheat markets regrouped overnight, gaining back a small part of Monday's losses. Meanwhile, the soy complex fell with bean oil erasing about half of Monday's gains. Corn, as is usually the case overnight, was quiet. Outside markets were mostly lower with selling seen in metals, energies, and softs despite a modestly lower U.S. dollar. DJIA futures were also under pressure following Monday's triple-digit rally.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 183.67 points (0.9%) higher at 20,636.92. The NASDAQ Composite rallied 51.64 points (0.9%) to 5,856.79 and the S&P 500 gained 20.06 points (0.9%) to 2,349.01 Monday. DJIA futures were 51 points lower early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei up 63.33 points (0.4%), Hong Kong's Hang Seng off 337.12 points (1.4%), and China's Shanghai Composite down 25.45 points (0.8%). European markets were trading lower Tuesday with London's FTSE 100 off 80.11 points (1.1%), Germany's DAX losing 73.59 points (0.6%), and France's CAC 40 off 65.60 points (1.3%). The euro was 0.0009 higher at 1.0652 while the U.S. dollar index was down 0.05 at 100.25. June 30-year T-Bonds were 20/32 higher at 154'03 while June gold lost $4.10 to $1,287.80. Crude oil was $0.43 lower at $52.22 while Brent crude fell $0.52 to $54.84. China's Dalian soybean and Malaysian palm oil futures were both lower again overnight.

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BULL BEAR
1) Export demand remains strong for U.S. corn supplies. 1) Spillover selling from soybeans could pull corn lower early Tuesday.
2) As with corn, Monday's weekly export inspection numbers could've been viewed as bullish for soybeans. 2) The big news in soybeans continues to be the prospects of Brazil's bigger crop.
3) Marketing year export inspections were neutral at worst for all U.S. wheat. 3) With no threats to new-crop winter wheat, buyers stay on the sidelines.

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 markets were quiet again overnight with both old-crop May and new-crop December posting 1 1/2-cent trading ranges through early Tuesday morning. The old-crop market may have just passed a critical timeframe, with 3-year seasonal studies showing both old-crop futures and the DTN National Corn Index posting secondary highs with the close of the third week of April (last Friday). On the other hand, export demand remains strong with Monday's weekly export inspection figure of 52.3 mb putting total marketing inspections 64% ahead of last year's pace, as compared to USDA's April estimate holding at a 17% marketing year-to-marketing year increase. As for new-crop, the story remains weather. Rains over much of the U.S. growing area has early planting slowed, but not to the point of being critical. New-crop December futures tend to post a secondary high at the end of the third week of June, reflecting strong spike rallies the last two summers.

SOYBEANS Soybean market bulls, emboldened by last week's technical (chart based) action, have to be disappointed in this week's early activity. Monday's rally fizzled out, allowing old-crop May and July contracts to close lower while November struggled to hold near unchanged. The overnight session saw only a brief foray above Monday's close before falling once again. While export demand has dipped, Monday's weekly inspection number came in at 15.8 mb, the slowdown is seasonal and total marketing year shipments continue to outpace USDA's projected 5% marketing year-to-marketing year increase. Also, last Friday's CFTC Commitments of Traders report showed noncommercial interests reducing their net-futures position to near even, meaning selling interest could begin to slow.

WHEAT Winter wheat contracts were showing small gains early Tuesday morning, recovering some of the ground lost during Monday's sell-off. Despite export numbers still solid, with Monday's export inspection number of 24.7 mb pulling all wheat totals even with USDA's projected pace of a 32% marketing year-to-marketing year increase, the futures market continues to struggle finding buying interest. This is made even more curious when the latest CFTC Commitments of Traders report showed noncommercial traders still holding a net-short futures position of 85,285 contracts (Chicago). There are no major threats for new-crop at this time, limiting the buying interest in July Chicago and Kansas City futures contracts.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.31 -$0.04 -$0.36 May $0.001
Soybeans: $8.80 -$0.01 -$0.73 May $0.008
SRW Wheat: $3.81 -$0.08 -$0.40 May $0.009
HRW Wheat: $3.26 -$0.11 -$0.90 May $0.003
HRS Wheat: $4.89 -$0.01 -$0.40 May $0.005

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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