DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was 6 cents higher, November soybeans were 22 cents higher, and September Minneapolis (HRS) wheat was 27 cents higher.

CME Globex Recap:

Fireworks surrounding the U.S. Fourth of July holiday started early this year, with Sunday's overnight session continuing to explode in the rocket's red glare that was lit last Friday. Wheat and soybeans held double-digit gains overnight through early Monday morning while corn was sitting near session highs. Outside commodities were lower, due in part to the U.S. dollar index once again becoming a Yankee Doodle Dandy. DJIA futures were also higher.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 62.60 points (0.3%) higher at 21,349.63, the NASDAQ Composite lost 3.93 points to 6,140.42, and the S&P 500 rallied 3.71 points (0.2%) to 2,423.41 Friday. DJIA futures were 62 points higher early Monday morning. Asian markets closed mostly higher with Japan's Nikkei up 22.37 points (0.1%), Hong Kong's Hang Seng gaining 19.59 points (0.1%), and China's Shanghai Composite up 3.48 points (0.1%). European markets were trading higher with London's FTSE 100 up 25.26 points (0.4%), Germany's DAX up 87.74 points (0.7%), and France's CAC 40 rallying 52.28 points (1.0%). The euro was 0.0047 lower at 1.1380 while the U.S. dollar index rallied 0.39 to 96.02. September 30-year T-Bonds were 7/32 lower at 153'15 while August gold lost another $8.30 to $1,234.00. Crude oil was $0.02 higher at $46.06 while Brent crude lost $0.04 to $48.73. China's Dalian soybean and Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	Spillover buying from wheat and soybeans should be enough to hold corn higher during Monday's holiday shortened session.	1)	Last Friday's Quarterly Stocks and Acreage reports could be viewed as long-term bearish for corn.
2)	Last Friday's Quarterly Stocks and Acreage reports could be viewed as neutral-to-bullish for soybean markets (old-crop, new-crop).	2)	A stronger U.S. dollar could take some of the steam out of the soybean market rally.
3)	All three wheat markets are showing strong long-term uptrends on monthly charts.	3)	Winter wheat futures spreads continue to reflect a bearish commercial outlook.

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 New-crop December corn left a bullish gap on its weekly chart between last week's high of $3.93 3/4 and the overnight low of $3.94 3/4. Its next target would now be the recent high of $4.09 from the week of June 5, 2017. Fundamentally, it's all about the weather. The last two weeks have called for general showers across much of the U.S. Midwest growing area, and while some rains have been seen the coverage has been spotty at best. This puts yield and production estimates in question later this summer and early fall. That having been said, last Friday's Quarterly Stocks and Acreage reports were generally bearish for corn showing more than expected for both. Keep an eye on basis for signs that a bubble might be forming in the old-crop market. Also, Monday will see the release of weekly export inspection data with corn expected to still be running well ahead of pace. New-crop corn remains in a weather market meaning traders will take note of each weather forecast heading into Monday's early close and Tuesday's holiday. Delivery of 1,938 contracts was reported against the July issue, putting the total at 3,880 contracts.

SOYBEANS Similar to December corn, new-crop November soybeans left a bullish price gap on its weekly chart between last week's high of $9.58 and the overnight low of $9.63. November soybeans have seen a slow build into a secondary (intermediate-term) uptrend on its weekly char with next resistance at $9.91, then $10.10 3/4. Fundamentally, the story remains the weather though last Friday's Quarterly Stocks and Acreage reports added some fuel to the fire. Quarterly Stocks came in slightly lower than expected, though still implying a possible 400 mb ending stocks on hand September 1. USDA's acreage estimate showed only a slight increase from March 31, still below the 90 ma-plus many thought was possible heading into the reports. The market itself has not agreed with this sentiment, given the neutral-to-bullish carry of new-crop soybeans forward curve. Monday will see a shortened session before being closed Tuesday for the U.S. holiday. Delivery of 1,045 contracts was reported against the July issue, putting the total at 2,110 contracts.

WHEAT All three major wheat markets continued to rocket higher overnight, once again led by Minneapolis spring. As discussed this past weekend in DTN's Technically Speaking blog, all three markets are showing strong uptrends on both weekly and monthly charts. September Minneapolis is having its credentials checked at the major (long-term) resistance checkpoint of $8.00, with the next not showing up on the long-term monthly chart until $9.07. Coming out of a harvest weekend Chicago (SRW) wheat is seeing solid commercial buying added to ongoing noncommercial short-covering. Despite this, the carry of its forward curve continues to indicate a bearish supply and demand situation. Delivery of 253 contracts was reported against the July Chicago, putting its total at 314 contracts. Another 709 contracts were reported delivered against the July Kansas City issue increasing its total to 793 contracts.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.35	$0.12	-$0.36	Jul	$0.008
Soybeans:	$8.81	$0.27	-$0.62	Jul	$0.001
SRW Wheat:	$4.95	$0.32	-$0.16	Jul	$0.009
HRW Wheat:	$4.55	$0.32	-$0.56	Jul	$0.011
HRS Wheat:	$7.30	$0.31	-$0.38	Jul	$0.042

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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