DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 5 cents higher, July soybeans were 8 cents higher, and July Kansas City (HRW) wheat was 15 cents higher.

CME Globex Recap:

The Governor of Kansas declared a state of emergency for parts of the Sunflower State belted by a blizzard (western part) and washed away by flood (eastern part). Speaking of flooding, states from Indiana to Texas are battling too much water as a massive spring storm made its way from the Plains through the Midwest. In response, July Kansas City wheat roared to a 17-cent gain overnight, while the rest of the grain complex also traded higher. Other commodities were lower with light pressure coming from a modest rally in the U.S. dollar index.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 40.82 points (0.2%) lower at 20,940.51. The NASDAQ Composite lost 1.33 points to 6,047.61 and the S&P 500 slipped 4.57 points (0.2%) to 2,388.77 Friday. DJIA futures were 26 points higher early Monday morning. Asian markets closed mixed with Japan's Nikkei up 113.78 points (0.6%). European markets were trading mixed Monday with London's FTSE 100 off 33.23 points (0.5%), Germany's DAX losing 5.78 points, and France's CAC 40 off 4.37 points. The euro was 0.0004 higher at 1.0900 while the U.S. dollar index gained 0.02 at 99.06. June 30-year T-Bonds were 8/32 lower at 152'23 while June gold fell $4.30 to $1,264.00. Crude oil was $0.15 lower at $49.18 while Brent crude lost $0.19 to $51.86. China's Dalian soybean and Malaysian palm oil futures were both closed overnight.

	BULL		BEAR
1)	Noncommercial short-covering is expected to support the corn market Monday.	1)	The corn market has struggled to maintain buying interest of late.
2)	Weekly export inspections are expected to show demand remains stronger than projected for U.S. soybeans.	2)	The possibility of delayed corn planting due to flooding in the U.S. Plains and Midwest could pressure new-crop soybeans.
3)	Winter weather in spring has led to a short-covering rally in winter wheat overnight into Monday morning.	3)	The most bearish news for wheat remains cumbersome global supplies and the relatively strong U.S. dollar.

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 As discussed in DTN's Technically Speaking blog (weekly analysis), corn was poised for a spike rally this week based on last Friday's CFTC Commitments of Traders report (legacy, futures only) and old-crop July's proximity to support on its weekly chart. Regarding the former, noncommercial traders reportedly held a net-short futures position of 83,268 contracts (as of Tuesday, April 25), the largest net-short futures position since the week of April 5, 2006. While not an absolute indicator, last year's position led to a round of noncommercial short-covering that eventually resulted in a rally by the July futures contract of roughly 90 cents through mid-June. New-crop December was also trading higher early Monday, possibly on spillover noncommercial buying from new-crop. Commercial interest was relatively quiet despite weekend pictures of flooding across parts of the eastern and southern corn growing areas. Delivery of another 936 contracts was reported against the May issue, putting the total at 2,036 contracts.

SOYBEANS Similar to corn, soybeans posted a solid rally overnight as noncommercial traders started to cover some of their net-short futures position. Last Friday's CFTC Commitments of Traders report showed this group holding net-short futures of 43,737 contracts (as of Tuesday, April 25), slightly larger than the previous net-short futures position of 42,292 contracts from the week of March 8, 2016. The round of noncommercial short-covering that followed led to a rally of roughly $3.00 by the DTN National Soybean Index (NSI.X, national average cash price) through late June. But as the old saying goes, past performance is not indicative of future results. Fundamentally, old-crop soybeans may not be the catalyst last year's cash market had though traders will keep a close eye on Monday's weekly export inspection number as an indicator of what's to come in Thursday's weekly export shipments. The July-to-August futures spread closed last Friday at a carry of only 2 cents, once again reflecting a bullish spring/summer supply and demand situation. Delivery of another 1,013 contracts was reported against the May issue, putting the total at 2,028 contracts.

WHEAT The big story in grains as May gets under way is the continued battering of the U.S. HRW wheat crop. A weekend ago the issue was freezing temperatures across much of the U.S. Southern Plains with much of the crop already headed out. This Monday all eyes are on the aftermath of a weekend blizzard that flattened the standing crop under snow measured in feet rather than inches. Add to that the technical side of July Kansas City wheat showing the contract had moved into a secondary (intermediate-term) uptrend at the end of last week (for more information, see this past weekend's Technically Speaking blog) to go with its already established minor (short-term) uptrend on daily charts. Lastly, fuel for a rally was also lit by last Friday's CFTC Commitments of Traders report (legacy, futures only) that showed noncommercial interests moving to a net short futures position of 2,551 contracts in Kansas City wheat. Delivery of another 453 contracts was reported against the May Chicago issue putting its total at 900 contracts. Delivery of another 576 contracts was reported against the May Kansas City issue putting its total at 976 contracts.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.25	-$0.03	-$0.42	Jul	-$0.004
Soybeans:	$8.78	$0.00	-$0.78	Jul	$0.009
SRW Wheat:	$3.84	$0.05	-$0.48	Jul	$0.044
HRW Wheat:	$3.42	$0.05	-$0.96	Jul	$0.012
HRS Wheat:	$5.10	$0.02	-$0.45	Jul	$0.006

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

(KA)

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