DTN Early Word Grains
Must've Rained Somewhere
December corn was 2 cents lower, November soybeans were 4 cents lower, and September Minneapolis (HRS) wheat was 9 cents lower.
CME Globex Recap:DTN's 24-hour rainfall map shows generally good coverage across the eastern Northern Plains and most of the U.S. Midwest, except for Illinois. While U.S. crops will need more rain, the last 24 to 36 hours at least provided some relief and brought selling back to the grain markets. In addition to weather, the FOMC increased the Fed Fund rate by 0.25% Wednesday, sparking a solid rally in the U.S. dollar index and putting pressure on DJIA futures overnight.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 46.09 points (0.2%) higher at 21,374.56, the NASDAQ Composite lost 25.48 points (0.4%) to 6,194.89, and the S&P 500 dipped 2.43 points (0.1%) to 2,437.92 Wednesday. DJIA futures were 82 points lower early Thursday morning. Asian markets closed mostly lower with Japan's Nikkei off 51.70 points (0.3%), Hong Kong's Hang Seng down 310.56 points (1.2%), and China's Shanghai Composite up 1.81 points. European markets were trading lower with London's FTSE 100 down 57.98 points (0.8%), Germany's DAX falling 97.77 points (0.8%), and France's CAC 40 losing 46.75 points (0.9%). The euro was 0.0056 lower at 1.1162 while the U.S. dollar index was 0.36 higher at 97.31. September 30-year T-Bonds were 4/32 higher at 155'24 while August gold fell $15.00 to $1,260.90. Crude oil was $0.05 lower at $44.68 while Brent crude gained $0.05 to $47.05. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.
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| BULL | BEAR | ||
| 1) | Weekly export sales and shipments (for the week ending Thursday, June 8) could come in bullish for corn. | 1) | New-crop December corn posted a short-term bearish technical signal Wednesday. |
| 2) | Total export shipments of soybeans in Thursday's weekly update (through the week ending Thursday, June 8) could be viewed as neutral-to-bullish. | 2) | Unshipped sales of soybeans in Thursday's weekly update are expected to grow larger. |
| 3) | Kansas City wheat did see renewed commercial buying during Wednesday's rally. | 3) | With another harvest weekend fast approaching, winter wheat market could see increased hedge pressure Thursday. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN New-crop December corn posted a bearish outside day Wednesday, meaning it traded outside the Tuesday's range before closing lower for the day. And just to emphasize the point, not only did it close lower but the settlement of $3.95 1/2 was below the previous day's low of $3.95 3/4. From a technical point of view then it is no surprise to see Dec corn under pressure overnight into Thursday morning, testing support near $3.93 3/4. This price marks the 50% retracement level of the previous short-term rally from $3.78 1/4 through the recent high of $4.09. Next support is down at $3.90, then $3.85 1/2. Fundamentally it's all about weather, at least until USDA's Quarterly Stocks and Acreage Update reports at the end of this month. If weather forecasts turn hot and dry again, buyers are likely to come back to the market. If not, look for corn to stay under light pressure Thursday.
SOYBEANS The daily chart for new-crop November soybeans is interesting in that the contract looks to still be in a minor (short-term) uptrend, despite having difficulty finding buying interest. Nov beans dipped below its low of $9.36 overnight, testing support near $9.33. This price marks the 50% retracement level of what looks to be Wave 1 of the minor 5-wave uptrend from the low of $9.15 1/2 through the recent high of $9.50 3/4. While a stronger U.S. dollar could put pressure on soybeans, from a fundamental point of view, traders will also keep an eye on Thursday's weekly export sales and shipment numbers. On the bearish side, unshipped sales continue to build, sitting at 262 mb as of last week's report. The shipment pace heading into this week's report is viewed as neutral or bullish, depending on the study one chooses to believe. For now, DTN's analysis shows total shipments on pace to be only slightly ahead of USDA's projected total demand of 2.050 bb.
WHEAT Winter wheat contracts were lower early Thursday morning on combined pressure from the sell-off in Minneapolis spring wheat (down 8 cents) and the rallying U.S. dollar index. Trade volume was moderate at best for the July Chicago issue overnight, coming in at 8,100 contracts. Activity is expected to increase in both Chicago and Kansas City as the day progresses and the weekend gets closer. Depending on weather forecasts, commercial selling tied to an expanding harvest could be seen.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.39 | -$0.04 | -$0.39 | Jul | $0.003 |
| Soybeans: | $8.67 | $0.00 | -$0.65 | Jul | $0.003 |
| SRW Wheat: | $4.19 | -$0.02 | -$0.24 | Jul | $0.005 |
| HRW Wheat: | $3.88 | $0.01 | -$0.69 | Jul | $0.003 |
| HRS Wheat: | $5.85 | $0.00 | -$0.43 | Jul | $0.009 |
Darin Newsom can be reached at darin.newsom@dtn.com
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