DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was 6 cents lower, November soybeans were 4 cents lower, and July Kansas City (HRW) wheat was 17 cents lower.

CME Globex Recap:

No matter how long one watches grain markets, they can still shock you at times. Such was the case Thursday morning, when the initial look at where things were sitting was like stepping into an ice cold shower to start the day. Despite mostly bullish, holiday-delayed weekly crop condition numbers from NASS Wednesday afternoon, grains (including oats) showed a solid sell-off overnight. Meanwhile cotton, crude oil, and gold were all supported by a slightly weaker U.S. dollar and continued pressure on DJIA futures.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 1.10 points lower at 21,478.17, the NASDAQ Composite added 40.80 points (0.7%) to 6,150.86, and the S&P 500 rallied 3.53 points (0.2%) to 2,432.54 Wednesday. DJIA futures were 82 points lower early Thursday morning. Asian markets closed mixed with Japan's Nikkei down 87.57 points (0.4%), Hong Kong's Hang Seng losing 56.75 points (0.2%), and China's Shanghai Composite up 5.31 points (0.2%). European markets were trading lower with London's FTSE 100 off 0.67 point, Germany's DAX down 92.00 points (0.7%), and France's CAC 40 losing 50.02 points (1.0%). The euro was 0.0012 higher at 1.1363 while the U.S. dollar index dipped 0.08 to 96.11. September 30-year T-Bonds were 17/32 lower at 152'26 while August gold gained $2.60 to $1,224.20. Crude oil was $0.62 higher at $45.75 while Brent crude added $0.63 to $48.42. China's Dalian soybean futures were lower while Malaysian palm oil futures were higher again overnight.

	BULL		BEAR
1)	Corn's weekly charts show the market still try to test the high side of its sideways range.	1)	Corn's daily chart shows its short-term trend may be rolling over.
2)	Soybeans remain bullish on daily, weekly, and monthly charts.	2)	Spillover pressure from the other grains has soybeans lower early Thursday.
3)	Spring wheat continues to show solid uptrends in both futures and futures spreads.	3)	Increased commercial selling could bring an end to winter wheat's uptrend.

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 For now, new-crop December corn's minor (short-term) trend on its daily chart remains sideways as the contract came up just short of its previous high of $4.09 before falling back. There is still small price gap between last Friday's high of $3.93 3/4 and this past Monday's low of $3.94 1/4 the contract may want to fill, posting a low of $3.94 overnight. Daily stochastics (short-term momentum study) continue to indicate there is more upside potential, but likely not a lot. Fundamentally is where things get more interesting for corn. Model runs late Wednesday into early Thursday shift the high pressure back to the west, allowing more moisture into the central and eastern parts of the Midwest. Of course these forecasts are subject to change given all the fluid factors that have to be accounted for. And of course there's the little matter of weekly crop condition numbers from NASS released Wednesday afternoon due to Tuesday's U.S. holiday. Based on these numbers, DTN's National Crop Condition Index increased by 2 points to 163 points. This puts the 2017 crop in similar condition to those seen in 2013 (167 points) and 2015 (164 points) at the 6 week mark of 16 crop condition reporting weeks. Delivery of 1,370 contracts was reported against the July issue, putting the total at 6,552 contracts.

SOYBEANS Soybeans were trading lower early Thursday, though indications are it was more out of sympathy for the other grains than an actual change of attitude regarding the market itself. However, a look at the short-term daily chart for new-crop November soybeans shows stochastics (momentum study) were nearing the overbought level of 80% as the contract neared resistance at $10.04 1/2. Wednesday's high was $9.97 1/4, with overnight trade taking Nov beans as far as $9.96 3/4. If soybeans are able to shake the weight of the rest of the grain complex, a Thursday rally is still possible. Then the contract would be in position to roll its minor uptrend to a downtrend, possibly as soon as the end of Friday's session. As for NASS' weekly crop condition update: The numbers resulted in a DTN National Crop Condition Index of 154 points for soybeans, as compared to the previous week's 158 points. However, this keeps the 2017 crop in step with the 154 points of the 2015 crop at the quarter-pole (fourth week of 16) of the crop condition reporting season. Delivery of 962 contracts was reported against the July issue, putting the total at 4,120 contracts.

WHEAT Winter wheat posted a sharp sell-off overnight with the September Chicago contract falling as much as 25 cents while Kansas City September lost 26 cents at one point. Technically both contracts are on the verge of rolling their minor (short-term) uptrends to downtrends, with the switch likely to occur at the end of Thursday's session. Both are also in position to establish short-term island-top patterns on their respective daily charts, also a sign that trends have changed direction. Fundamentally there is little fresh news to provide support to winter wheat with harvest reaching its latter stages, according to NASS' weekly crop progress numbers. As discussed in this space previously, that should lead to increased commercial pressure following the recent rally. Delivery of 201 contracts was reported against the July Chicago, putting its total at 732 contracts. Another 408 contracts were reported delivered against the July Kansas City issue increasing its total to 1,656 contracts.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.47	$0.05	-$0.45	Sep	$0.019
Soybeans:	$9.16	$0.13	-$0.66	Aug	$0.011
SRW Wheat:	$5.28	$0.05	-$0.32	Sep	-$0.005
HRW Wheat:	$4.98	$0.12	-$0.72	Sep	$0.020
HRS Wheat:	$7.78	$0.15	-$0.42	Sep	$0.114

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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