DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was 2 cents higher, November soybeans were 4 cents higher, and September Minneapolis (HRS) wheat was 16 cents higher.

CME Globex Recap:

Overnight rains across the western Corn Belt didn't dampen the bullish enthusiasm of the grain complex, particularly Minneapolis spring wheat. Activity in corn soybeans was quieter than what was seen in wheat, while the soft complex saw cotton move higher while the rest of the markets remain under pressure. Energy markets were also under pressure and metals mostly higher. Meanwhile, DJIA futures and the U.S. dollar index were both showing gains ahead of the conclusion of the FOMC's two-day meeting. The general consensus seems to be an announcement of an interest rate hike will be made early Wednesday afternoon.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 92.80 points (0.4%) higher at 21,328.47, the NASDAQ Composite gained 44.90 points (0.7%) to 6,220.37, and the S&P 500 added 10.96 points (0.5%) to 2,440.35 Tuesday. DJIA futures were 24 points higher early Wednesday morning. Asian markets closed mixed with Japan's Nikkei off 15.23 points (0.1%), Hong Kong's Hang Seng rallying 23.80 points (0.1%), and China's Shanghai Composite down 23.07 points (0.7%). European markets were trading higher with London's FTSE 100 up 34.12 points (0.5%), Germany's DAX gaining 89.95 points (0.7%), and France's CAC 40 adding 49.68 points (0.9%). The euro was 0.0009 lower at 1.1203 while the U.S. dollar index was 0.05 higher at 97.05. September 30-year T-Bonds were 6/32 higher at 154'07 while August gold gained $0.80 to $1,269.40. Crude oil was $0.55 lower at $45.91 while Brent crude lost $0.45 to $48.27. China's Dalian soybean futures were mostly lower while Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	Spillover buying from the wheat complex could continue to support the corn market Wednesday.	1)	Overnight rains are moving across parts of the western U.S. Midwest corn growing area.
2)	Old-crop soybeans could see renewed commercial buying interest tied to continued strong export demand.	2)	Similar to corn, new-crop soybeans could soon come under pressure from rains across the U.S. Midwest.
3)	September Minneapolis spring wheat has moved to the market's highest price in 2 1/2 years.	3)	July Kansas City (HRW) wheat is approaching short-term technical resistance on its daily chart.

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 As the middle of June approaches, the attention of traders has turned almost entirely to the new-crop corn market. The Dec contract continued its rally off Monday's low of $3.94 1/4, gaining back a total of roughly 61.8% (Fibonacci) of its sell-off overnight as it tested resistance near $4.03 1/2. Next minor (short-term) resistance is at the 76.4% retracement level of $4.05 1/2. Given the combination of indicators on its daily chart (stochastics, increasing open interest, etc.) Dec corn looks like it could test last Thursday's high of $4.09 in the near future. Fundamentally is where the market gets interesting. Traders will take note of a band of storms moving across the western Corn Belt Wednesday morning, particularly if it holds together and produces meaningful rain across the heart of the U.S. growing area. Also, corn is likely to be influenced by outside markets such as the strong rally in Minneapolis spring wheat and the unknown reaction of financial markets to an expected FOMC rate hike shortly before the daily close in grains.

SOYBEANS As with corn, the bulk of the attention in the soybean market is now on the new-crop November futures contract. In fact, Nov beans now shows the most open interest of almost 285,000 contracts compared to July's 248,000. Technically Nov beans continue to consolidate within the minor (short-term) uptrend on its daily chart. With another rally expected, next resistance is pegged at $9.61 then $9.75. These prices mark the 38.2% (Fibonacci) and 50% retracement levels of the previous minor downtrend from $10.34 1/2 through the recent low of $9.15 1/2. Fundamentally the song remains the same as that sung in corn: It's all about the weather. Traders will monitor early morning weather maps that show a long line of storms moving across parts of the U.S. western Midwest.

WHEAT The U.S. wheat complex continues to be driven by the strong rally posted by the Minneapolis spring market. Overnight trade saw new-crop September move above $6.50, a price not seen on the market's continuous monthly chart since December 2014. Commercial buying has been the catalyst of late, with traders not only concerned about possibly production losses but wondering where they will be able to get their hands on protein wheat. The hard red wheat cash protein spread (DTN National Hard Red Spring Wheat Index minus the DTN National Hard Red Winter Wheat Index) posted a new high of $1.97 when calculated Tuesday evening. Winter wheat contracts were able to rally overnight, once again led by July Kansas City. There the contract is fast approaching minor (short-term) resistance on its daily chart between $4.69 and $4.78.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.42	$0.04	-$0.39	Jul	$0.003
Soybeans:	$8.68	$0.01	-$0.65	Jul	$0.001
SRW Wheat:	$4.21	$0.12	-$0.24	Jul	$0.009
HRW Wheat:	$3.88	$0.15	-$0.69	Jul	$0.011
HRS Wheat:	$5.84	$0.27	-$0.44	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

(KA)

Copyright 2017 DTN/The Progressive Farmer. All rights reserved.