DTN Early Word Grains

Winter Wheat Woes Weren't Where Watson Wanted

6:00 a.m. CME Globex:

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

CME Globex Recap:

Day 1 of the Kansas Wheat Quality Council Tour found some better than expected crops, though the hardest hit areas from this past weekend's storm could come into play Wednesday. Nevertheless, sellers hit winter wheat overnight, spilling over into the corn market. Soybeans posted a quiet session with contracts holding near unchanged. Outside markets were mixed with gold under pressure once again while crude oil tried to recover a small part of Tuesday's sell-off. The U.S. dollar index continues to consolidate ahead of Wednesday's interest rate announcement by the FOMC.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 36.43 points (0.2%) higher at 20,949.89. The NASDAQ Composite gained 3.76 points to 6,095.37 and the S&P 500 added 2.84 points (0.1%) to 2,391.17 Tuesday. DJIA futures were 26 points lower early Wednesday morning. Asian markets closed mostly lower with Japan's Nikkei closed, Hong Kong's Hang Seng closed, and China's Shanghai Composite off 8.37 points (0.3%). European markets were trading mostly lower Wednesday with London's FTSE 100 down 22.87 points (0.3%), Germany's DAX losing 26.93 points (0.2%), and France's CAC 40 off 19.98 points (0.4%). The euro was 0.0016 lower at 1.0915 while the U.S. dollar index gained 0.14 to 99.09. June 30-year T-Bonds were 3/32 higher at 152'27 while June gold lost $2.50 to $1,254.50. Crude oil was $0.39 higher at $48.05 while Brent crude added $0.43 to $50.89. China's Dalian soybean futures were higher while Malaysian palm oil futures were lower overnight.

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BULL BEAR
1) Noncommercial short-covering could remerge in the corn market. 1) If wheat continues to tumble, corn could see renewed selling interest Wednesday due to a lack of other news.
2) Trends on daily and weekly soybean charts remain up. 2) The rally in soybeans has been less than convincing to this point, possibly sparking increased selling interest.
3)

Day 2 of the Kansas Wheat Quality Council Tour could find more damage from this past weekend's blizzard.

3) Computerized trade seemed to view Day 1 results of the Kansas Wheat Quality Council Tour as bearish.

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 one would expect, corn market's saw another overnight session with much the same expected during Wednesday's mid-week session. Both old-crop July and new-crop December contracts continue to consolidated within Monday's trading range, still holding the price gap on daily charts between Monday's lows and last Friday's highs. Fundamentally, traders aren't expected to get overly excited about weather maps until closer to the weekend. However, as is often the case, lower volume could lead to a larger price range as Wednesday progresses. Delivery of another 970 contracts was reported against the May issue, putting the total at 3,636 contracts.

SOYBEANS Soybeans were quiet overnight with both old-crop July and new-crop November posting narrow 4-cent trading ranges. While both remain in short-term and intermediate-term uptrends on daily and weekly charts, neither has been able to generate much buying interest after Monday's rally. Traders could take an interest in the FOMC announcement on interest rates at midday, with the general consensus being the Fed won't make another move until possibly June. If so, the U.S. dollar could weaken, sparking another round of buying interest in soybeans. Delivery of another 184 contracts was reported against the May issue, putting the total at 3,083 contracts.

WHEAT Day 1 of the Kansas Wheat Quality Council tour saw crops that were projected to average 43 bushels per acre as compared to 47.1 bpa for the same areas the year before. Day 2 will find tourists traveling deeper into the hardest hit areas of last weekend's spring blizzard, likely lowering average yield expectations even more. However, computers were willing sellers of the Day 1 news overnight, driving both Kansas City (HRW) and Chicago (SRW) markets lower. Despite the sell-off, short-term trends on daily charts for new-crop July contracts remain up. Delivery of another 39 contracts was reported against the May Chicago issue putting its total at 1,288 contracts. Delivery of another 242 contracts was reported against the May Kansas City issue putting its total at 1,960 contracts.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.32 -$0.05 -$0.40 Jul $0.005
Soybeans: $8.94 -$0.01 -$0.75 Jul $0.000
SRW Wheat: $4.10 $0.01 -$0.44 Jul $0.027
HRW Wheat: $3.78 $0.04 -$0.89 Jul $0.017
HRS Wheat: $5.15 -$0.06 -$0.43 Jul -$0.011

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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