DTN Early Word Grains

And Now, Back to Our Regularly Scheduled Weather Markets

6:00 a.m. CME Globex:

December corn was 5 cents higher, November soybeans were 7 cents higher, and September Minneapolis (HRS) wheat was 10 cents higher.

CME Globex Recap:

This week has finally reached Friday meaning a normal weather-market weekend can commence. The overnight session saw the opening stages with grains and oilseeds rallying, with markets expected to increase in volatility over the course of the day and through next Monday. Minneapolis spring wheat quickly took the reins back as the weekend approaches with its September contract posting a double-digit gain. The rest of the complex was only 2 cents to 3 cents higher. Outside markets were also rallying, helped a little by a slightly weaker U.S. dollar index. DJIA futures were also post a small loss.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 20.95 points (0.1%) higher at 21,553.09, the NASDAQ Composite gained 13.27 points (0.2%) to 6,274.44, and the S&P 500 added 4.58 points (0.2%) to 2,447.83 Thursday. DJIA futures were 9 points lower early Friday morning. Asian markets closed mostly higher with Japan's Nikkei up 19.05 points (0.1%), Hong Kong's Hang Seng gaining 43.06 points (0.2%), and China's Shanghai Composite adding 4.25 points (0.1%). European markets were trading mixed with London's FTSE 100 down 16.63 points (0.2%), Germany's DAX off 9.22 points, and France's CAC 40 rallying 4.08 points. The euro was up 0.0017 at 1.1416 while the U.S. dollar index dipped 0.07 to 95.69. September 30-year T-Bonds were 6/32 higher at 152'12 while August gold gained $1.40 to $1,218.70. Crude oil was $0.22 higher at $46.30 while Brent crude rallied $0.25 to $46.67. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.

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BULL BEAR
1) Corn contracts fell far enough the last two days to test minor (short-term) technical price support levels. 1) Thursday's weekly export shipment number (for the week ending Thursday, July 6) continued to show a slowdown in U.S. corn movement.
2) This week's sell-off could be enough to uncover new commercial buying in soybeans. 2) Short-term daily charts remain bearish for soybeans.
3) Strong commercial buying was seen in Minneapolis spring wheat overnight, due in large part to weekend weather forecasts. 3) Winter wheat markets have no fundamental reason to rally.

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 The influence of volatility has been on full display this week in the corn market, with new-crop December falling from a high of $4.17 1/4 Tuesday afternoon to a low of $3.81 3/4 48 hours later. Overnight trade saw the contract stabilize near the technical support level of $3.84 1/4, a price that marks thee 76.4% retracement level of the previous minor (short-term) uptrend from $3.74 through Tuesday's high. Support came from renewed commercial buying interest, not surprising given the weather market weekend that has come closer on the horizon. Morning forecasts maps don't look bearish, at the moment, with DTN's 5-day precipitation map showing the U.S. Midwest north of I-80 largely missing out on rains. Selling associated with Wednesday's USDA Crop Production reports has likely calmed down as well, with the realization that yield changes don't tend to occur until August setting in. This could be enough to bring noncommercial buying back in along with the commercial activity already being seen. Delivery of 205 contracts was reported against the July issue, putting the total at 9,777 contracts.

SOYBEANS Traders hit the pause button on the recently established minor (short-term) downtrend in soybeans overnight. Buyers returned with new-crop November holding near technical price support at $9.93 1/2, a price that marks the 38.2% retracement level (Fibonacci) of its previous minor uptrend from $9.07 through this past Tuesday's high of $10.47. While it's possible the contract could retest its recent high, due to a possible dryer weather forecast through early next week, the short-term downtrend does not look to have run its course yet. However, Thursday's news of an approximate 460 mb purchase of 2017-2108 soybeans by a Chinese delegation visiting Iowa could be the first step in bringing buyers back to the futures market. Look for Friday to be a normal start to a weather-market weekend, though increased volatility could be difficult to achieve given the degree of Thursday's sell-off. Delivery of 123 contracts was reported against the July issue, putting the total at 5,864 contracts.

WHEAT Spring wheat futures sprang back to life due largely to the fact the actual crop isn't likely to. Weather forecasts for the U.S. Northern Plains and Canadian Prairies hold little to no chance of a break in the hot and dry conditions that have plagued the area this summer. Weather maps were enough to bring commercial buyers back to the market overnight, pushing the September Minneapolis contract to double-digit gains. Look for winter wheat contracts to remain in a follower role, with little fundamental reason to rally at this point. Delivery of 3 contracts was reported against the July Chicago, putting its total at 1,068 contracts. Another 8 contracts were reported delivered against the July Kansas City issue increasing its total to 2,206 contracts.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.25 -$0.16 -$0.45 Sep $0.000
Soybeans: $9.10 -$0.45 -$0.66 Aug $0.006
SRW Wheat: $4.79 -$0.25 -$0.33 Sep $0.001
HRW Wheat: $4.47 -$0.28 -$0.68 Sep $0.004
HRS Wheat: $7.09 -$0.33 -$0.41 Sep $0.002

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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