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 2 cents higher, and September Minneapolis (HRS) wheat was 16 cents higher.

CME Globex Recap:

Minneapolis spring wheat found renewed buying interest overnight, rallying more than 21 cents at one point before pulling back from its session high slightly. Winter wheat contracts followed, at a distance, as did corn and soybeans. Meanwhile, soybean oil and canola turned lower as Malaysian palm oil came under pressure. Outside trade saw softs mostly lower, led by cotton, energies mostly higher, and metals lower. Financials switched places from early Monday with DJIA futures showing a gain while the U.S. dollar index was lower as the U.S. FOMC begins its two-day June meeting.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 36.30 points (0.2%) lower at 21,235.67, the NASDAQ Composite fell 32.45 points (0.5%) to 6,175.46, and the S&P 500 lost 2.38 points (0.1%) to 2,429.39 Monday. DJIA futures were 23 points higher early Tuesday morning. Asian markets closed mostly higher with Japan's Nikkei off 9.83 points, Hong Kong's Hang Seng rallying 144.06 points (0.6%), and China's Shanghai Composite adding 13.87 points (0.4%). European markets were trading higher with London's FTSE 100 up 11.05 points (0.2%), Germany's DAX gaining 74.12 points (0.6%), and France's CAC 40 adding 24.45 points (0.5%). The euro was 0.0008 higher at 1.1211 while the U.S. dollar index was 0.11 lower at 97.05. September 30-year T-Bonds were 05/32 lower at 152'26 while August gold lost $4.70 to $1,264.20. Crude oil was $0.13 higher at $46.21 while Brent crude added $0.15 to $48.44. China's Dalian soybean futures were mostly higher while Malaysian palm oil futures were lower overnight.

	BULL		BEAR
1)	Base on NASS' weekly numbers, the DTN Crop Condition Index for corn decreased 6 points from the previous week.	1)	Monday's weekly export inspection report (for the week ending Thursday, June 8) saw total inspections of corn lose ground to the previous year.
2)	Export demand for U.S. soybeans remains solid, as indicated by Monday's weekly export inspection number of 18.7 mb.	2)	The trend on the old-crop soybean July-to-August futures spread remains down, reflecting a strengthening carry.
3)	The decrease in NASS' spring wheat weekly crop condition numbers seems to be bigger than expected.	3)	Winter wheat harvest continues to expand into southern Kansas.

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 corn market saw mixed news Monday, leading to a sharply lower close, before spillover buying from wheat (yes, you read that right) propped contracts up overnight. Old-crop July continues to see declining open interest as traders move their positions to new-crop December. Weekly export inspections announced Monday (for the week ending Thursday, June 8) once again lost ground to last year's pace though total inspections continue to run ahead of USDA's projected pace. Fundamentally, old-crop traders are already looking ahead to the June 30 Quarterly Stocks report to see if it confirms USDA's June ending stocks projection of 2.295 bb. The DTN National Corn Index fell to $3.38 Monday evening, putting it in the lower 16% of its 10-year distribution range. As for new-crop December, the contract could see light buying interest early Tuesday after NASS trimmed its weekly crop condition ratings slightly from the previous week. This resulted in a DTN Crop Condition Index of 159 points, down from the previous week's 165 points and previous year's 181 points.

SOYBEANS U.S. soybean contracts showed a slight uptick overnight, gaining back a small part of what was lost during Monday's sell-off. Technically old-crop July has seen its recently established minor (short-term) uptrend stall just below initial resistance at $9.52 3/4, a price that marks the 23.6% retracement level of the previous. Fundamentally demand remains strong for old-crop U.S. supplies, with Monday's weekly export inspection number (for the week ending Thursday, June 8) of 18.7 mb increasing this year's lead over last marketing year to 18%, as compared to USDA's June demand projection holding at a 6% marketing year-to-marketing year increase. Despite this, the old-crop July-to-August futures spread continues to trend down (show a stronger carry) and continues to cover a neutral level of full commercial carry. New-crop November is holding near initial resistance at $9.43 1/2, with its next minor upside target sitting at $9.61.

WHEAT Minneapolis spring wheat was able to trim its loss late Monday, setting the stage for what would turn out to be an explosive overnight session. Spring wheat was energized overnight by NASS' weekly crop condition numbers that resulted in a DTN Crop Condition Index of 105 points; down 32 points from a week ago, 82 points from a year ago, and as DTN's Todd Hultman pointed out in his post-report comments the lowest in over two decades. This helped bring strong commercial buying back to the market, indicated by a strengthening inverse in the September-to-December futures spread and a move to par in the December-to-March. Technically, the market is fast approaching its major (long-term) price target of $6.30. Look for spring wheat to provide support to winter wheat markets, though buying in the latter is expected to be limited by expanding harvest.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.38	-$0.10	-$0.39	Jul	$0.006
Soybeans:	$8.66	-$0.10	-$0.65	Jul	$0.004
SRW Wheat:	$4.09	-$0.10	-$0.25	Jul	$0.018
HRW Wheat:	$3.72	-$0.07	-$0.71	Jul	$0.016
HRS Wheat:	$5.57	-$0.06	-$0.43	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)

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