DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 7 cents lower, July soybeans were 20 cents lower, and July Kansas City (HRW) wheat was 4 cents lower.

CME Globex Recap:

Wednesday's overnight session into Thursday morning once again highlights why Black Swans aren't predictable. The news surrounding Brazil's President Temer, embroiled in a payment scandal, sent the real reeling overnight and sparked a strong sell-off in Chicago soybeans. The rest of the grain complex, commodities in general, followed suit as ripple effects quickly spread.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 372.82 points (1.8%) lower at 20,606.93, the NASDAQ Composite fell 158.63 points (2.6%) to 6,011.24, and the S&P 500 lost 43.64 points (1.8%) to 2,357.03 Wednesday. DJIA futures were 87 points lower again early Thursday morning. Asian markets closed lower with Japan's Nikkei down 261.02 points (1.3%), Hong Kong's Hang Seng off 157.11 points (0.6%), and China's Shanghai Composite losing 14.30 points (0.5%). European markets were trading lower with London's FTSE 100 off 109.44 points (1.5%), Germany's DAX down 129.26 points (1.0%), and France's CAC 40 losing 68.77 points (1.3%). The euro was 0.0038 lower at 1.1121 while the U.S. dollar index gained 0.19 to 97.58. June 30-year T-Bonds were 12/32 higher at 154'05 while June gold added $2.20 to $1,260.90. Crude oil was $0.95 lower at $48.12 while Brent crude lost $0.99 to $51.21. China's Dalian soybean futures and Malaysian palm oil futures were both mostly lower overnight.

	BULL		BEAR
1)	Weekly export sales could come in bullish for corn Thursday morning.	1)	Weekly export shipments of corn are expected to come in below what is needed this week to stay on pace with USDA's demand projection.
2)	If Brazilian farmers don't react as expected and unload copious amounts of newly harvested soybeans, the futures market could come back from the overnight sell-off.	2)	If Brazilian farmers start to sell newly harvested soybean supplies in the feared amounts, then the overnight sell-off could just be the tip of the iceberg.
3)	July winter wheat contracts continue to hold above previous lows. That's about it for bullish wheat factors.	3)	Weekly export sales of wheat could show more cancelations, or rolling of old-crop sales to new-crop.

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 contracts easily erased Wednesday's gains as spillover pressure from soybeans hit the market overnight. Old-crop July took out last week's low of $3.65 as trade volume jumped to 34,800 contracts. Next support is the 4-week low of $3.60 3/4. Fundamentally there is little fresh news to provide a spark to old-crop corn, though traders will keep an eye on Thursday morning's weekly export shipments number (for the week ending Thursday, May 11). The market needs weekly shipments of 42.7 mb (1,083,900 mt) to stay on pace with USDA's demand projection of 2.225 bb. Last week's report showed 28.5 mb. As for new-crop, outside of spillover selling from old-crop traders will focus on weather forecasts. Replanting talk has dominated conversation the last couple of days as farmers move to get back into soggy fields across the U.S. Midwest.

SOYBEANS Soybeans were the main story overnight as the market reacted to a series of headlines coming from Brazil. First, it's a well-accepted fact that Brazilian farmers harvested a record large crop and were sitting on most of their new-crop production. Second, news started to break that Brazilian President Temer found himself ensnared in a pay-off scheme. Next, the Brazilian real tumbled overnight as global sellers made a mad rush out of the currency. Finally, based on the idea the real was collapsing soybeans took a nosedive on the fear Brazilian farmers would start selling newly harvested supplies. This drove the old-crop July contract down 20 cents, hitting that low early Thursday morning as this analysis was being written. Technically, as discussed often in this space, July beans vulnerable pattern on weekly charts was exposed, opening the trapdoor to a possible test of the previous low of $9.41 1/4. As for demand, weekly export shipments (for the week end Thursday, May 11) are expected to be larger than the 12.0 mb (326,900 mt) needed this week, but most likely not enough to stem the bearish overnight tide.

WHEAT Winter wheat markets were lower overnight, easily erasing Wednesday's gains and putting both July Chicago and Kansas City back in position to test recent lows. Pressure was tied to spillover selling from soybeans, associated with the political turmoil in Brazil. Also, the U.S. dollar index recovered slightly from Wednesday's fall, though the rally was largely overlooked in favor of the goings on with the Brazilian real. Fundamentally, as far as the weekly Export Sales and Shipments report is concerned (for the week ending Thursday, May 11) traders will be most interested in seeing if more cancelations occurred, or possibly rolling old-crop sales to new-crop. Shipments need to come in at 39.2 mb (1,067,200 mt) to stay on pace with USDA's May demand projection of 1.035 bb. Last week's report showed shipments of 21.9 mb.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.34	$0.04	-$0.38	Jul	$0.005
Soybeans:	$9.07	$0.00	-$0.69	Jul	$0.005
SRW Wheat:	$3.89	$0.03	-$0.38	Jul	$0.003
HRW Wheat:	$3.45	$0.02	-$0.81	Jul	$0.005
HRS Wheat:	$5.01	$0.02	-$0.40	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

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