DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was 4 cents higher, November soybeans were 3 cents higher, and September Kansas City (HRW) wheat was 13 cents higher.

CME Globex Recap:

Grains were higher again early Friday morning, ahead of USDA's Quarterly Stocks and Acreage reports. The wheat complex led the charge, with winter contracts keeping pace with Minneapolis spring wheat this time. Gains in corn and soybeans were less, but still were impressive given the reports that lie ahead. Outside markets were mostly higher, softs and energies in particular, while metals traded lower. The U.S. dollar index saw a small rally while DJIA futures tried to gain back some of Thursday's sell-off.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 167.58 points (0.8%) lower at 21,287.03, the NASDAQ Composite lost 90.06 points (1.4%) to 6,144.34, and the S&P 500 fell 20.99 points (0.9%) to 2,419.70 Thursday. DJIA futures were 50 points higher early Friday morning. Asian markets closed mostly lower with Japan's Nikkei down 186.87 points (0.9%), Hong Kong's Hang Seng off 200.84 points (0.8%), and China's Shanghai Composite up 4.36 points (0.1%). European markets were trading higher with London's FTSE 100 up 1.36 points, Germany's DAX up 24.93 points (0.2%), and France's CAC 40 rallying 26.79 points (0.5%). The euro was 0.0033 lower at 1.1408 while the U.S. dollar index rallied 0.17 to 95.73. September 30-year T-Bonds were 4/32 lower at 154'04 while August gold lost another $2.60 to $1,242.20. Crude oil was $0.36 higher at $45.29 while Brent crude added $0.28 to $47.70. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

	BULL		BEAR
1)	It's possible both USDA's Quarterly Stocks and Acreage reports could turn out bullish for corn.	1)	Weather forecasts remain bearish for corn.
2)	USDA's quarterly stocks number could be bullish for soybeans.	2)	USDA's updated planted acres number is expected to be bearish for new-crop soybeans.
3)	All three wheat markets are showing long-term uptrends on monthly charts.	3)	Winter wheat markets could see increased commercial selling heading into a harvest weekend.

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 Friday has finally arrived, bringing with it USDA's Quarterly Stocks and Acreage reports. With all the hubbub surrounding pre-report estimates, new-crop December corn has quietly established a minor (short-term) uptrend on its daily chart. The overnight session saw Dec corn move above its previous 4-day high of $3.82 3/4, with next retracement resistance pegged near $3.87 1/4. The fundamental catalyst for this newly established trend could come from either quarterly stocks or the acreage update. If stocks come in under 5.15 bb (as of June 1) it would suggest USDA is overestimating old-crop ending stocks/new-crop beginning stocks. Furthermore, if USDA's acreage estimate is dramatically below the March 31 Prospective Plantings guess of 90 million acres it could spark heated debate of production falling to the point of substantially decreasing new-crop ending stocks. Once the reports have come and gone, traders will turn their attention back to the weather maps ahead of the weekend. Initial delivery of 1,942 contracts was reported against the July issue.

SOYBEANS Soybean markets, both old-crop and new-crop, were trading higher early Friday. As one might expect, with what should be an interesting set of quarterly stocks and acreage numbers released later Friday, old-crop was gaining on new-crop. Heading into USDA's Quarterly Stocks (as of June 1) report the though is soybean stocks could, perhaps should, come in lower than expected due to the ongoing solid pace of export demand. There is also USDA's tendency to overestimate U.S. soybean ending stocks to suggest that this next important mile market will reflect that larger than projected demand. On the other hand, soybean acreage could soar well above expectations, with some quietly suggesting a number as large as 92 million acres. While it is unlikely to be seen Friday, the seeds could be sown for such a number later this fall with an upward revision taking soybean acres above 90 million at the end of June. Technically, new-crop November soybeans have rallied off support at $9.07 to target initial minor (short-term) resistance on its daily chart at $9.37. Beyond that sights would be set on $9.55 3/4. As the month comes to an end, keep in mind that soybeans' major (long-term) trend remains down. Initial delivery of 1,065 contracts was reported against the July issue.

WHEAT All three major wheat markets were posting solid double-digit gains early Friday morning. While Minneapolis spring wheat has been the story this week, gaining 20% this week alone (through Thursday's high of $7.68), winter wheat has also performed well despite a quickly advancing harvest. Gains in July 2018 contracts for both Chicago (SRW) and Kansas City (HRW) have been impressive enough to possibly generate ideas of more planted acres this fall, particularly if long-term trends on monthly charts of both markets remain up. As for USDA's reports Friday, wheat will likely stay out of the line fire of most traders. Some interest will be paid to the quarterly stocks numbers as it relates to USDA's June ending stocks figure for the 2016-2017 marketing year. Keep in mind this is the actual ending stocks number for wheat. Initial delivery of 61 contracts was reported against the July Chicago, and 84 contracts against the July Kansas City issue.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.23	$0.03	-$0.37	Jul	$0.004
Soybeans:	$8.54	$0.02	-$0.62	Jul	$0.003
SRW Wheat:	$4.63	$0.24	-$0.17	Jul	$0.009
HRW Wheat:	$4.23	$0.19	-$0.57	Jul	$0.001
HRS Wheat:	$6.99	$0.33	-$0.42	Jul	-$0.039

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

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