DTN Early Word Grains

Grains Hit the Snooze Button

6:00 a.m. CME Globex:

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

CME Globex Recap:

The first day of summer, Thursday, must have exhausted the grain markets because they all decided to sleep in Friday morning. An early morning check showed only Chicago with anything more than a fractional change, with most contracts sitting just below unchanged. Outside markets were more active with heavy selling seen in crude oil, moderate pressure continuing in gold, and the U.S. dollar index off slightly. Financial traders are eagerly awaiting the release of the May nonfarm payroll and unemployment figures.

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OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 135.53 points (0.7%) higher at 21,144.18, the NASDAQ Composite rallied 48.31 points (0.8%) to 6,246.83, and the S&P 500 gained 18.26 points (0.8%) to 2,430.06 Thursday. DJIA futures were 62 points higher early Friday morning. Asian markets closed higher with Japan's Nikkei up 317.25 points (1.6%), Hong Kong's Hang Seng gaining 114.83 points (0.4%), and China's Shanghai Composite up 2.92 points (0.1%). European markets were trading mostly higher with London's FTSE 100 up 19.93 points (0.3%), Germany's DAX adding 176.38 points (1.4%), and France's CAC 40 gaining 47.65 points (0.9%). The euro was 0.0012 higher at 1.1224 while the U.S. dollar index dipped 0.02 to 97.18. September 30-year T-Bonds were 6/32 higher at 153'23 while August gold lost $4.70 to $1,265.40. Crude oil was $1.46 lower at $46.90 while Brent crude lost $1.51 to $49.12. China's Dalian soybean futures were higher while Malaysian palm oil futures were lower overnight.

BULL BEAR
1) Following Thursday's lower close in corn, the short-term daily pattern of alternating closes would suggest a higher settlement Friday. 1) A clearer weekend forecast for parts of the U.S. Midwest could put pressure on new-crop corn.
2) Weekly export shipments of soybeans could keep marketing year totals ahead of USDA's projected pace. 2) With total marketing year sales of U.S. soybeans above USDA's May demand projection, the potential is there for possible cancellations.
3) Scattered showers are forecast for the U.S. Southern Plains HRW wheat growing area, possibly slowing harvest (far south) and increasing disease potential. 3) As with soybeans, given previous outstanding sales U.S. wheat could see cancellations or rolling 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 There's not much new to say about corn Friday morning with futures (both old-crop and new-crop), cash (the DTN National Corn Index), and spreads (again both old-crop and new-crop) all trending sideways. The overnight session saw July corn post a 2-cent trading range on volume of only 8,4000 contracts while December managed only a 1 3/4-cent range as 2,000 contracts changed hands. Friday's session could get more active though as traders watch weather forecasts heading into a growing season weekend (presumably, for those that have been able to plant). The usual course of action is for a volatility to increase, the market to spike one way or the other Friday, followed by an opposite move Monday. Finally, here's a fun factoid: December corn has alternated higher and lower closes over the last eight days. With Thursday close 1 3/4 cents below Wednesday's settlement, is a higher close in the cards Friday? Stay tuned.

SOYBEANS As Early Word Grains was being written, soybeans rallied from fractionally lower to modestly higher. While no big block of buy orders came in, contracts seemed to finally wake up from a restful overnight session. Trade volume was light with only 7,700 contracts of July and 2,600 contracts of new-crop November changing hands. Technically, both the July and November find themselves sharply oversold on short-term daily charts, with daily stochastics deep into single digits. Recall from previous discussions in DTN's Technically Speaking blog that anything below 20% is considered oversold, setting the stage for a bullish crossover signally a change in trend. Fundamentally, old-crop soybean traders will take a look at Friday's holiday delayed weekly export sales and shipment numbers for the week ending Thursday, May 25. Though outdated, the shipment number in particularly could show export demand continues to run stronger than USDA's May projection of 2.05 bb.

WHEAT Winter wheat contracts were fractionally lower early Friday morning following a quiet overnight session. Both Chicago (SRW) and Kansas City (HRW) could see volatility pick up a bit as Friday's session progresses, with direction decided by weather forecasts heading into the weekend, particularly for areas where early harvest is trying to get started (e.g. southern Ohio Valley for SRW, southern Texas for HRW). Technically July Chicago is testing minor (short-term) price support at $4.26 3/4 while July Kansas City sits in its support range between $4.32 1/4 and $4.26 1/4. It may still be too early in the season to see the normal pre-harvest weekend commercial selling, though such activity is still a slight risk.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.33 -$0.02 -$0.37 Jul -$0.004
Soybeans: $8.46 -$0.04 -$0.66 Jul -$0.006
SRW Wheat: $3.96 $0.00 -$0.33 Jul -$0.001
HRW Wheat: $3.53 -$0.02 -$0.78 Jul -$0.009
HRS Wheat: $5.38 $0.06 -$0.40 Jul -$0.012

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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