DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 1 cent higher, July soybeans were 4 cents higher, and July Kansas City (HRW) wheat was 2 cents higher.

CME Globex Recap:

A line of powerful thunderstorms with soaking rains, flash flooding, and strong straight-line winds stretched from southern Texas through Iowa overnight. This round of rain likely slowed planting in some areas, and caused crop damage in others, all helping support grain markets early Wednesday morning. Additional support was tied to the continued weakness of the U.S. dollar index, with most other commodities trading higher as well.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 2.19 points lower at 20,979.75, the NASDAQ Composite gained 20.20 points (0.3%) to 6,169.87, and the S&P 500 dipped 1.65 points to 2,400.67 Tuesday. DJIA futures were 100 points lower early Wednesday morning. Asian markets closed mostly lower with Japan's Nikkei down 104.94 points (0.5%), Hong Kong's Hang Seng off 42.31 points (0.1%), and China's Shanghai Composite losing 8.52 points (0.3%). European markets were trading lower with London's FTSE 100 off 0.36 point, Germany's DAX down 53.05 points (0.4%), and France's CAC 40 losing 26.04 points (0.5%). The euro was 0.0018 higher at 1.1101 while the U.S. dollar index lost 0.19 to 98.00. June 30-year T-Bonds were 21/32 higher at 152'08 while June gold added $11.00 to $1,247.40. Crude oil was $0.08 higher at $48.74 while Brent crude rallied $0.20 to $51.85. China's Dalian soybean futures and Malaysian palm oil futures were both higher overnight.

	BULL		BEAR
1)	Spillover buying from soybeans could support corn early Wednesday.	1)	Corn is nearing the point when continued rains could be viewed as bearish.
2)	Strong commercial buying continues to support old-crop soybeans.	2)	Despite this week's early rally, soybeans still haven't taken out last week's highs.
3)	The continued sell-off by the U.S. dollar index could bring light buying interest back to wheat.	3)	Winter wheat remains vulnerable to renewed commercial selling.

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 corn market looked a little different Wednesday morning as compared to the last two, with contracts posting small gains on higher trade volume and wider overnight trading ranges. For instance, old-crop July was a penny higher after posting a range of 3 1/4 cents (nearly triple what was seen Monday and Tuesday) on volume of 16,400 contracts. New-crop December was similar; up 1 cent, range of 3 1/4 cents, volume of 7,200 contracts. Support came from a couple of different places: First, the U.S. dollar index continues to sag. Second, Tuesday's late rally carried over into the overnight session. Third, more rain was seen over parts of the western Corn Belt (though the crop may soon reach the point that rain could be viewed as bearish). Lastly, soybeans continue to climb providing support to the rest of the grain complex. Don't expect corn to climb out of its sideways trading range during Wednesday's session, but light support throughout the day wouldn't be all that surprising.

SOYBEANS While soybeans have posted a solid rally early this week, contracts have yet to take out last week's high signaling a strengthening seasonal uptrend. For old-crop July that means a move above $9.89, new-crop November $9.80. As discussed numerous times Tuesday, the key to the old-crop market is the newly minted inverse in the July-to-August futures spread. This reflects an increasingly bullish view of old-crop fundamentals, meaning export demand is likely to remain strong due in part to the weakening U.S. dollar index. Though still a day away, traders are already anticipating another solid weekly export shipment number (for the week ending Thursday, May 11), keeping total marketing year shipments ahead of USDA's projected pace.

WHEAT Winter wheat markets posted small gains early Wednesday morning, supported by spillover buying from soybeans and corn and the continued weakness of the U.S. dollar index. As for weather, strong storms once again hit the U.S. Southern Plains overnight, possibly bringing additional damage to a crop that has already come out of dormancy early, experienced a freeze, was flattened by a blizzard, has recently struggled to recover due to high heat and strong winds, and been subjected to a number of diseases. Or in other words, just another crop year for winter wheat. Meanwhile, both new-crop July Chicago and Kansas City contracts are holding above technical support at previous lows.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.29	$0.01	-$0.38	Jul	$0.005
Soybeans:	$9.07	$0.12	-$0.69	Jul	$0.008
SRW Wheat:	$3.86	$0.02	-$0.39	Jul	$0.009
HRW Wheat:	$3.43	-$0.03	-$0.82	Jul	$0.013
HRS Wheat:	$4.99	$0.00	-$0.40	Jul	$0.003

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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