DTN Early Word Grains

Short Week Off to a Lower Start

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
Connect with Todd:
6:00 a.m. CME Globex:

July corn was 3 cents lower, July soybeans were 2 cents lower, and July Kansas City (HRW) wheat was 4 cents lower.

CME Globex Recap:

Grains were met with renewed selling interest coming out of three-day holiday weekend. Despite having the most bearish charts, soybean held together better than corn and wheat through early Tuesday morning. Outside markets were also lower despite a sell-off by the U.S. dollar index. DJIA futures were also under light pressure.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 2.67 points lower at 21,080.28, the NASDAQ Composite rallied 4.94 points to 6,210.19, and the S&P 500 gained 0.75 point to 2,415.82 Friday. DJIA futures were 15 points lower early Tuesday morning. Asian markets closed mixed with Japan's Nikkei down 4.72 points, Hong Kong's Hang Seng gaining 62.36 points (0.2%), and China's Shanghai Composite adding 2.23 points. European markets were trading mostly lower with London's FTSE 100 off 28.05 points (0.4%), Germany's DAX down 3.64 points, and France's CAC 40 losing 29.69 points (0.6%). The euro was 0.0004 higher at 1.1168 while the U.S. dollar index lost 0.15 to 97.44. June 30-year T-Bonds were 7/32 higher at 154'04 while August gold slipped $4.50 to $1,266.90. Crude oil was $0.23 lower at $49.57 while Brent crude lost $0.45 to $51.84. Malaysian palm oil futures were lower overnight.

BULL BEAR
1) Marketing year total export inspections of corn are expected to still be running ahead of USDA's projected pace. 1) Since corn traded higher last week, and trends remains sideways, it makes sense for the markets (old-crop, cash, and new-crop) to be under pressure.
2) Weekly export inspections of soybeans are expected to be bullish. 2) Soybean contracts moved to new lows overnight, extending downtrends on daily and weekly charts.
3) The lower U.S. dollar index could give at least a little hope to U.S. wheat market bulls. 3) Commercial selling is expected to increase as winter wheat harvest draws near.

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 With the corn market locked in a continued sideways trend on daily, weekly, and monthly charts, how better to respond to last week's rally than to sell-off coming out of a three-day holiday weekend. Both old-crop July and new-crop December were near overnight session lows early Tuesday morning. Fundamentally, both markets are still the same with old-crop July-to-September and new-crop December-to-March futures spreads trending sideways at neutral-to-bearish levels of carry. Tuesday morning will see the holiday-delayed release of weekly export inspections (week ending Thursday, May 25) while Tuesday afternoon brings with it the always eagerly anticipated weekly crop progress and condition updates from NASS.

SOYBEANS Given last week's bearish close, it was probably too much to ask for soybeans to build on a slightly higher open to Monday's overnight session. Sure enough, the market saw increased selling interest as the session progressed, pushing both old-crop July and new-crop November through last week's lows. Though volume was moderate at best, futures spreads indicate at least some of the pressure was tied to commercial selling as the carry in old-crop July-to-August and new-crop November-to-January continue to strengthen. As with corn, traders will take note of holiday-delayed reports, with weekly export inspections released Tuesday morning and NASS' crop progress and condition numbers coming out well after the close.

WHEAT With harvest just around the corner, winter wheat contracts were under pressure coming out of the three-day holiday weekend. Both July Chicago (SRW) and Kansas City (HRW) contracts were sitting near overnight session lows early Tuesday morning. Fundamentally, the July-to-September spread for both markets continues to show a strong carry reflecting a bearish view of supply and demand. Traders will take note of weekly export inspections (for the week ending Thursday, May 25), though this late in the old-crop marketing year they aren't expected to influence new-crop much.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.37 $0.05 -$0.37 Jul -$0.001
Soybeans: $8.59 -$0.13 -$0.67 Jul $0.003
SRW Wheat: $4.02 $0.09 -$0.36 Jul $0.011
HRW Wheat: $3.59 $0.06 -$0.79 Jul $0.000
HRS Wheat: $5.29 $0.07 -$0.40 Jul $0.002

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

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

(KA)

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Todd Hultman