DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was fractionally lower, July soybeans were 3 cents lower, and July Kansas City (HRW) wheat was 1 cent lower.

CME Globex Recap:

Grains were mostly lower overnight into Friday morning, a day when everything adds up (5/12/17, get it?). Soybeans continued to struggle, losing ground and setting the stage for bearish technical signals heading into the weekend. Corn and winter wheat were fractionally higher. Outside markets were also mixed with crude oil lower and gold higher. In the softs, sugar and cotton were higher early Friday while cocoa and coffee were showing small losses. Both the U.S. dollar index and DJIA futures were under pressure.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 23.69 points (0.1%) lower at 20,919.42, the NASDAQ Composite lost 13.18 points (0.2%) to 6,115.96, and the S&P 500 dipped 5.19 points (0.2%) to 2,394.44 Thursday. DJIA futures were 39 points lower early Friday morning. Asian markets closed mostly lower with Japan's Nikkei down 77.65 points (0.4%), Hong Kong's Hang Seng gaining 30.79 points (0.1%), and China's Shanghai Composite rallying 22.01 points (0.7%). European markets were trading mixed with London's FTSE 100 gaining 14.07 points (0.2%), Germany's DAX up 11.86 points (0.1%), and France's CAC 40 off 0.58 point. The euro was 0.0009 higher at 1.0872 while the U.S. dollar index dipped 0.04 to 99.61. June 30-year T-Bonds were 12/32 higher at 151'00 while June gold added $4.60 to $1,228.80. Crude oil was $0.11 lower at $47.72 while Brent crude was down $0.09 at $50.68. China's Dalian soybean futures were lower while Malaysian palm oil futures were mostly lower.

	BULL		BEAR
1)	Corn could try to regain some of Thursday's loss to close out the week.	1)	Weather forecasts are more favorable for corn planting, more bearish for new-crop corn prices.
2)	As of early Friday morning, soybean weekly charts remain bullish.	2)	Both old-crop July and new-crop November soybeans are nearing bearish technical signals as Friday progresses.
3)	Both July Chicago and Kansas City continue to hold above technical support on their respective daily charts.	3)	Thursday's weekly export sales report (for the week ending Thursday, May 4) showed the first old-crop sales cancellations as the marketing year nears its end.

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 The math is pretty simple in corn as the July contract moved a total of 2 1/4 cents overnight on trade volume of only 9,200 contracts through early Friday morning. Meanwhile the sideways trend on its weekly chart continues to chug along between $3.93 3/4 and $3.60 3/4, a range of only 33 cents spanning the last 13 weeks. That timeframe covers a number of USDA reports, weekly export updates, and numerous trade headlines. Still, noncommercial maintain their net-short futures position and commercial interests now hold a bearish view of short-term supply and demand given the recent strengthening of the carry in the July-to-September spread. As for new-crop December: Direction equals weather forecasts plus time. For now that means the market could grind lower as planting weather looks more favorable over the U.S. Midwest for the next week or so.

SOYBEANS The equation in soybeans is almost simpler than that seen in the other grains heading into Friday's session: If old-crop July soybeans stay above last week's low of $9.58 1/2, even if it closes lower for the week, then it maintains recent bullish signals on its weekly chart. If not, then it establishes a bearish outside week that could hint at a possible test of its recent low of $9.41 1/4. Overnight trade saw July move lower again, posting a low through early Friday morning of $9.61 3/4, on volume of roughly 9,500 contracts. New-crop November faces a similar mathematical problem, though its low from last week is down at $9.54 1/4 as compared to its overnight mark of $9.59 1/2. Export demand remains a bullish fundamental for old-crop, though it hasn't provided much support as this week has progressed.

WHEAT As usual, the math in winter wheat deals in unknown variables, most notably the damage done to the HRW crop in the western half of the U.S. Southern Plains during the now infamous May 1 blizzard. While daily charts for both July Chicago (SRW) and Kansas City (HRW) still look bullish, a day of subtraction heading into the weekend could change things. July Chicago has rallied off its test of short-term support at $4.26 3/4, but hasn't benefitted from a great deal of buying enthusiasm from either commercial or noncommercial traders. Kansas City July is consolidating above its support level of $4.20 1/4, but again unable to generate much upside momentum.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.30	-$0.04	-$0.39	Jul	$0.004
Soybeans:	$8.95	-$0.04	-$0.71	Jul	$0.001
SRW Wheat:	$3.92	$0.01	-$0.42	Jul	-$0.008
HRW Wheat:	$3.56	$0.02	-$0.85	Jul	$0.002
HRS Wheat:	$5.07	$0.03	-$0.41	Jul	-$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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