DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

July corn was 3 cents higher, July soybeans were 8 cents higher, and July Kansas City (HRW) wheat was 5 cents higher.

CME Globex Recap:

Grains were all trading higher, except for oats, early Thursday morning as the complex continues to extend its early summer gains. Weather forecasts remain the catalyst pushing new-crop corn and Minneapolis spring wheat higher. Outside commodities were mostly higher with gains seen in softs and energies while metals, including gold, were mostly lower. The U.S. dollar index and DJIA futures were both showing gains.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 37.46 points (0.2%) higher at 21,173.69, the NASDAQ Composite gained 22.32 points (0.4%) to 6,297.38, and the S&P 500 added 3.81 points (0.2%) to 2,433.14 Wednesday. DJIA futures were 28 points higher early Thursday morning. Asian markets closed mostly higher with Japan's Nikkei down 75.36 points (0.4%), Hong Kong's Hang Seng up 88.90 points (0.3%), and China's Shanghai Composite adding 10.01 points (0.3%). European markets were trading mostly higher with London's FTSE 100 off 3.07 points, Germany's DAX up 44.68 points (0.4%), and France's CAC 40 gaining 13.84 points (0.3%). The euro was 0.0023 lower at 1.1233 while the U.S. dollar index was 0.20 higher at 96.90. September 30-year T-Bonds were 12/32 lower at 154'04 while August gold lost $6.50 to $1,286.70. Crude oil was $0.39 higher at $46.11 while Brent crude gained $0.50 to $48.56. China's Dalian soybean futures were higher while Malaysian palm oil futures were lower again overnight.

	BULL		BEAR
1)	Total marketing year export shipments are expected to still be bullish for corn.	1)	There's not much bearish news in the corn market Thursday morning.
2)	Last week's soybean sales are expected to be bullish again for soybeans.	2)	The rally in old-crop soybeans could be dulled by increased commercial selling.
3)	Winter wheat contracts have established new 4-week highs this week, a bullish technical signal.	3)	Another winter wheat harvest weekend is fast approaching, possibly bringing with it increased 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 upside breakout in corn continued to build momentum overnight with old-crop July pushing toward its next set of weekly highs near $3.93 3/4 and December set to test resistance on its weekly chart at $4.07 1/2. The breakdown of the recent rally is interesting, with futures spreads indicating commercial buying in both old-crop and new-crop and noncommercial short-covering in the old-crop July. There open interest has decreased this week while new-crop December is showing more contracts being held. The big news this week won't be USDA's June Crop Production and Supply and Demand reports set for release Friday, but weather forecasts calling for above normal temperatures this weekend over much of the U.S. growing area. Thus the buying from both sides in new-crop, as the rally starts to resemble moves made the last two years about this same time of summer. As for old-crop, traders will take note of Thursday's weekly export sales and shipment numbers (for the week ending Thursday, June 1) with marketing year totals of the latter expected to still be well ahead of USDA's projected pace in its May reports.

SOYBEANS Soybean contracts were showing strong gains early Thursday morning. The focus of the market is quickly shifting to new-crop November as it gained on the January 2018 contract overnight. This could have been a function of generally low trade volume in the deferred issues, or a round of overnight commercial buying ahead of what is expected to be an active day. Similar to corn the recent rally in new-crop has come from both commercial and noncommercial traders, while old-crop July has been driven in large part by noncommercial short-covering indicated by a continued decrease in open interest. Technically, November beans have reached the initial resistance mark of $9.45 1/2 on its weekly chart, with the next targets sitting up at $9.64 1/4 and $9.79 1/4. Furthermore, it's interesting to note that the DTN National Soybean Index (NSI.X, national average cash price) continues to show an island bottom formation on its weekly chart. This indicates that the secondary (intermediate-term) trend of cash soybeans has turned up at a time of year when the market tends to start its seasonal slide.

WHEAT July contracts for both Chicago (SRW) and Kansas City (HRW) have posted new 4-week highs this week, indicating at the least both could rally back toward a test of resistance at $4.72 3/4 and $4.64 respectively. If winter wheat is to rally, Thursday might be its best chance ahead of possible pre-weekend harvest related selling late Friday. There is also the small matter of USDA's June Crop Production and Supply and Demand reports to deal with, sets of numbers that are expected to show mixed results for wheat. Last but certainly not least is Minneapolis spring wheat, a market that looks to have regained some of its mojo overnight. After a lackluster couple days, new-crop September is back within striking distance of its old high of $6.09 3/4. However, from a technical point of view, the contract's weekly stochastics (intermediate-term momentum study) has moved into overbought territory.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.46	$0.06	-$0.39	Jul	-$0.012
Soybeans:	$8.65	$0.07	-$0.66	Jul	-$0.004
SRW Wheat:	$4.14	$0.09	-$0.31	Jul	$0.001
HRW Wheat:	$3.72	$0.08	-$0.74	Jul	$0.000
HRS Wheat:	$5.52	-$0.04	-$0.43	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

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