DTN Early Word Grains
Grains Start the Week Weakly
July corn was 4 cents lower, July soybeans were 4 cents lower, and July Kansas City (HRW) wheat was 7 cents lower.
CME Globex Recap:Grains were under pressure early Monday morning as traders showed little interest in weekend weather during the overnight session. Meanwhile, the U.S. dollar index was down slightly, helping crude oil and gold post small rallies. Soft markets were mostly higher, though cotton chose to follow corn and soybeans rather than cocoa and coffee. DJIA futures were also in the red to start the week.
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The Dow Jones Industrial Average closed 89.44 points (0.4%) higher at 21,271.97, the Nasdaq Composite fell 113.85 points (1.8%) to 6,207.92, and the S&P 500 lost 2.02 points to 2,431.77 Friday. DJIA futures were 36 points lower early Monday morning. Asian markets closed mostly lower with Japan's Nikkei down 104.68 points (0.5%), Hong Kong's Hang Seng off 322.25 points (1.2%), and China's Shanghai Composite losing 18.52 points (0.6%). European markets were trading mostly lower with London's FTSE 100 off 21.16 points (0.3%), Germany's DAX down 125.22 points (1.0%), and France's CAC 40 off 57.41 points (1.1%). The euro was 0.0023 higher at 1.1218 while the U.S. dollar index was 0.15 lower at 97.13. September 30-year T-Bonds were 01/32 lower at 154'06 while August gold gained $0.40 to $1,271.80. Crude oil was $0.20 higher at $46.03 while Brent crude added $0.27 to $48.42. China's Dalian soybean futures were higher while Malaysian palm oil futures were closed overnight.
| BULL | BEAR | ||
| 1) | Regardless of what USDA said in its Friday reports, export demand looks to be stronger for U.S. corn supplies. | 1) | Much of the recent rally in corn was due to noncommercial short-covering, still a bearish pattern. |
| 2) | Soybeans have established uptrends on weekly charts. | 2) | USDA's ending stocks estimates for both old-crop and new-crop U.S. soybeans increased in last Friday's reports. |
| 3) | Much of the Northern Plains spring wheat growing area missed out on weekend rains. | 3) | Winter wheat harvest has moved into southern Kansas. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN As we make our way through early summer, there are two things we know about old-crop corn: 1) There isn't anything to get excited about fundamentally and 2) There isn't anything to get excited about technically. Friday's June round of Supply and Demand numbers saw USDA leave all its 2016-17 numbers unchanged, including export demand at 2.225 billion bushels. This despite last Thursday's total export shipment numbers continuing to imply an additional 233 million bushels of demand is possible. It's possible these extra bushels won't make an appearance in a USDA report until the Sept. 30 Quarterly Stocks release. Technically, July corn continues to hold below its previous high of $3.93 3/4 while daily stochastics (short-term momentum study) show the contract to be near overbought. Lastly, open interest for July corn continues to decrease, indicating most of the recent rally was due to noncommercial short-covering rather than new buying interest. Regarding new-crop December, traders showed little interest in continued hot conditions across much of the U.S. growing area this past weekend. This could change as action picks up over the course of Monday's session.
SOYBEANS Unlike old-crop corn, USDA did slightly adjust old-crop soybean demand by decreasing crush 15 mb in last Friday's June release of data. This raised 2016-17 ending stocks to 450 mb, with the ripple effect lifting new-crop 2017-2018 ending stocks from May's 480 mb to a 495 mb estimate. Last Thursday's round of weekly export sales and shipment numbers showed marketing year total shipments of 1.891 bb of USDA's projected 2.050 bb. This would imply shipments through June 1 were on pace with USDA, in agreement with the number remaining unchanged again in the June round of Supply and Demand reports. Technically, July soybeans are near initial short-term upside resistance at $9.52 3/4, a price that marks the 23.6% retracement level of the contract's previous minor downtrend. Similar to old-crop corn, open interest in July soybeans decreased during the initial leg of the ongoing short-term uptrend. New-crop November has also seen its short-term trend turn up as of late, with next resistance up at $9.61. However, buyers have little reason fundamentally to get excited about the market at this time.
WHEAT Some rains were reported over parts of the U.S. Northern Plains this past weekend, taking a little of the bullish edge off Minneapolis spring wheat futures to start the week. Meanwhile, winter wheat harvest crept into south-central Kansas late last week with early results showing good initial yields. This has the Kansas City market under pressure early Monday morning with the lead July contract sitting near overnight session lows. In its report last Friday, USDA increased total winter wheat production slightly to 1.250 bb, due in large part to a 5 mb increase in HRW. The general consensus heading into the report was that USDA would post a slight reduction in new-crop production.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.48 | $0.02 | -$0.40 | Jul | -$0.002 |
| Soybeans: | $8.76 | $0.03 | -$0.66 | Jul | -$0.003 |
| SRW Wheat: | $4.19 | -$0.01 | -$0.27 | Jul | $0.025 |
| HRW Wheat: | $3.79 | -$0.02 | -$0.72 | Jul | $0.004 |
| HRS Wheat: | $5.63 | $0.02 | -$0.44 | Jul | -$0.005 |
Darin Newsom can be reached at darin.newsom@dtn.com
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