DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 2 cents higher, July soybeans were 4 cents higher, and July Kansas City (HRW) wheat was 5 cents higher.

CME Globex Recap:

For the first time in weeks, or so it seems, none of the grains could be described as "fractionally" lower or higher to start the day. All three major markets - yes, including corn - were showing gains of at least 2 cents overnight into Wednesday morning. This despite a rally in the U.S. dollar index that had other commodities on the defensive with both gold and crude oil showing small losses. DJIA futures were under pressure again as well.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 47.81 points (0.2%) lower at 21,136.23, the NASDAQ Composite dipped 20.63 points (0.3%) to 6,275.06, and the S&P 500 slipped 6.77 points (0.3%) to 2,429.33 Tuesday. DJIA futures were 12 points lower early Wednesday morning. Asian markets closed mixed with Japan's Nikkei up 4.72 points, Hong Kong's Hang Seng off 22.98 points (0.1%), and China's Shanghai Composite rallying 38.20 points (1.2%). European markets were trading mostly higher with London's FTSE 100 up 11.87 points (0.2%), Germany's DAX off 0.34 point, and France's CAC 40 gaining 22.22 points (0.4%). The euro was 0.0032 lower at 1.1245 while the U.S. dollar index was 0.30 higher at 96.83. September 30-year T-Bonds were 2/32 lower at 154'29 while August gold lost $3.40 to $1,294.10. Crude oil was $0.18 lower at $48.01 while Brent crude dipped $0.25 to $49.87. China's Dalian soybean futures were higher while Malaysian palm oil futures were lower overnight.

	BULL		BEAR
1)	The combination of increasing market volatility and noncommercial traders still holding a large net-short futures position could support corn.	1)	July corn has not been able to break out of the sideways trend on the market's weekly close only chart yet.
2)	Both old-crop July and new-crop November soybeans have established uptrends on daily charts.	2)	Commercial selling continues to creep into the soybean market.
3)	Minneapolis spring wheat continues to show solid uptrends in both futures and futures spreads.	3)	Overnight trade saw carry creep back into the Minneapolis spring wheat September-to-December futures spread.

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, both old-crop July and new-crop December, look to have finally broken out of their respective minor (short-term) sideways trends on daily charts. Similarly both are showing potential bullish breakouts on weekly charts, with the July sitting near the high-side of the range on the market's continuous weekly close only chart at $3.80 3/4. The fly in the ointment, as least as far as old-crop is concerned, is the strengthening carry of the July-to-September futures spread that now covers a moderately bearish 69% of calculated full commercial carry. Despite this recent bearishness, both July and December were trading about 3 cents higher early Wednesday morning. With market volatility still expected to see an increase over the coming weeks, corn could continue to find support from noncommercial covering of their net-short futures position.

SOYBEANS Soybean contracts were trading roughly 4 cents higher early Wednesday morning as both old-crop July and new-crop November continue to build on recent short-term bullish technical signals. Both have established minor uptrends on daily charts with initial upside targets of $9.52 1/2 (July) and $9.43 1/2 (November). Meanwhile, the DTN National Soybean Index (NSI.X, national average cash price) continues to show a potential island-bottom on its weekly chart (for more information, see the Technically Speaking update from June 4). Structurally the soybean market resembles corn in that much of the support could continue to come from noncommercial short-covering, while the carry in the old-crop July-to-August futures spread slowly strengthens. The latter reflecting a slightly more bearish view of short-term supply and demand, though the spread still covers a neutral level of full commercial carry.

WHEAT The Minneapolis spring market continues to be the darling of the wheat complex, though some warning flags are beginning to be unfurled. Overnight trade saw the September-to-December futures spread move back into a carry, reflecting increased commercial selling in the front-month new-crop contract. With the market in general technically overbought on daily (short-term) and weekly (intermediate-term) charts, increased commercial selling is not what market bulls are wanting to see to start the day. If spring wheat falters Wednesday, it doesn't seem like it would take much to pull winter markets back below unchanged for the day. Overnight trade saw the July contract for both Chicago and Kansas City trade higher, with the latter gaining a nickel through early Wednesday morning.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.36	$0.01	-$0.37	Jul	$0.004
Soybeans:	$8.56	$0.01	-$0.66	Jul	$0.004
SRW Wheat:	$3.98	$0.01	-$0.32	Jul	$0.006
HRW Wheat:	$3.55	-$0.02	-$0.75	Jul	$0.013
HRS Wheat:	$5.47	$0.05	-$0.42	Jul	-$0.007

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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