DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was fractionally lower, November soybeans were 2 cents higher, and July Kansas City (HRW) wheat was 6 cents higher.

CME Globex Recap:

Grain markets mostly resumed this week's trek higher, continuing to be led by Minneapolis spring wheat. The only laggard was corn with contracts near unchanged to fractionally lower as of this writing. Outside markets were generally higher as crude oil stabilizes and gold tries to recover some of Thursday's sharp loss. The U.S. dollar index eased lower while DJIA futures rallied overnight.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 14.66 points lower at 21,359.90, the NASDAQ Composite lost 29.39 points (0.5%) to 6,165.50, and the S&P 500 dipped 5.46 points (0.2%) to 2,432.46 Thursday. DJIA futures were 22 points higher early Friday morning. Asian markets closed mostly higher with Japan's Nikkei up 111.44 points (0.6%), Hong Kong's Hang Seng gaining 61.15 points (0.2%), and China's Shanghai Composite down 9.32 points (0.3%). European markets were trading higher with London's FTSE 100 up 52.37 points (0.7%), Germany's DAX gaining 38.78 points (0.3%), and France's CAC 40 adding 30.21 points (0.6%). The euro was 0.0027 higher at 1.1172 while the U.S. dollar index was 0.10 lower at 97.37. September 30-year T-Bonds were 1/32 lower at 155'14 while August gold rallied $3.20 to $1,257.80. Crude oil was $0.19 higher at $44.65 while Brent crude gained $0.34 to $47.26. China's Dalian soybean futures were mostly higher while Malaysian palm oil futures were higher again overnight.

	BULL		BEAR
1)	If midday weather models show a decreased chance of rain over the weekend, look for new-crop corn to close higher Friday.	1)	If midday weather models show an increased chance of rain over the weekend, look for new-crop corn to close lower Friday.
2)	New-crop November soybeans remain in an uptrend on its daily chart, ticking above its previous high from June 8 overnight.	2)	New-crop November soybeans are nearing a short-term overbought situation that could limit new buying interest.
3)	Commercial buying has come storming back to the Minneapolis spring wheat market after Thursday's early sell-off.	3)	If weather forecasts clear for the U.S. Southern Plains, Kansas City wheat could see some pre-weekend harvest pressure develop late Friday.

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 Corn is corn, meaning it likes to spend its time moving sideways. This week has seen a clear pattern of alternating higher and lower closes, with the latter due up Friday. What could cause a sell-off in the market, particularly with the other grains all rallying overnight? Keep an eye on weekend weather forecasts for those will be the key to Friday's close in corn. If midday weather model runs call for rain over parts of the U.S. Midwest growing area, corn has a good chance of closing lower. Then if it doesn't rain as much as expected, look for Monday to see a volatile rally. This is all normal weather market behavior, just occurring in June rather than the usual July timeframe. Corn's oddity is its spike lower Thursday before posting a solid rally to a higher close. New-crop December dipped below minor (short-term) support at $3.90, posting a low of $3.88 1/4, before closing at $3.97 3/4.

SOYBEANS As discussed in this space Thursday morning, new-crop November soybeans remain in a minor (short-term) uptrend on its daily chart. The most recent overnight session saw the contract quietly move above its daily high of $9.50 3/4 (June 8), posting a peak of $9.51 before falling back about a nickel. This still remains well short of the technical target at $9.61, a price that marks the 38.2% retracement level of its previous short-term downtrend. The problem Nov beans is facing is that daily stochastics (short-term technical momentum study) is already nearing overbought readings. This could limit new buying in the contract to a certain extent. Fundamentally new-crop soybeans are no different than new-crop corn, with traders monitoring each and every run of weather models. Look for those to come into play before the end of the day.

WHEAT If corn's spike lower Thursday was interesting (see above) then the move posted by Minneapolis spring wheat was mystifying. At one point early Thursday the new-crop September contract was down about 17 cents, most likely on rains across parts of the Northern Plains growing area the day before. But by the end of the day, commercial buying had reemerged leading to a strong rally that resulted in a gain of 5 cents on the close. The contract wasted no time establishing higher trade overnight, with early Friday morning showing Sep Minneapolis sitting near its session high of $6.46 1/2. Spring wheat continues to be driven by concern over the U.S. crop and a lack of protein coming from the ongoing hard red winter harvest. Speaking of winter wheat, some areas continue to be hit by adverse weather heading into the weekend. This could provide support for much of Friday's session, possibly limiting pre-weekend harvest hedge pressure.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.41	$0.02	-$0.39	Jul	-$0.003
Soybeans:	$8.70	$0.03	-$0.65	Jul	-$0.001
SRW Wheat:	$4.30	$0.10	-$0.24	Jul	-$0.004
HRW Wheat:	$3.97	$0.09	-$0.68	Jul	$0.010
HRS Wheat:	$5.90	$0.06	-$0.42	Jul	$0.007

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.