DTN Early Word Grains

Medium Rare Markets Monday Morning

Darin Newsom , DTN Senior Analyst
6:00 a.m. CME Globex:

December corn was 3 cents lower, November soybeans were 1 cent lower, and September Kansas City (HRW) wheat was 5 cents lower.

CME Globex Recap:

On a day when most will be focusing on crop condition ratings that don't come out until after the close, it seems fitting to start the day by rating markets based on level of doneness. World grain and oilseed markets are more pink than red, or medium rare as they say in the steak world, early Monday morning. Lower overnight trade looked to be more technical than fundamental given weather maps that showed little to no rain for most of the U.S. growing areas over the weekend, the exception being the Delta and Southeast, and an equally vacant morning map. Some of the pressure could also have been tied to last Friday's CFTC Commitment of Traders report.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 84.65 points (0.4%) higher at 21,637.74, the NASDAQ Composite gained 38.03 points (0.6%) to 6,312.47, and the S&P 500 added 11.44 points (0.5%) to 2,459.27 Friday. DJIA futures were 11 points higher early Monday morning. Asian markets closed mostly higher with Japan's Nikkei closed, Hong Kong's Hang Seng gaining 81.35 points (0.3%), and China's Shanghai Composite off 45.95 points (1.4%). European markets were trading mixed with London's FTSE 100 up 25.33 points (0.3%), Germany's DAX down 49.31 points (0.4%), and France's CAC 40 off 0.09 point. The euro was down 0.0012 at 1.1457 while the U.S. dollar index gained 0.11 to 95.22. September 30-year T-Bonds were 7/32 higher at 152'27 while August gold added $2.00 to $1,229.50. Crude oil was $0.16 higher at $46.70 while Brent crude rallied $0.21 to $49.12. China's Dalian soybean futures and Malaysian palm oil futures were both lower overnight.

BULL BEAR
1) December corn continues to hold above minor (short-term) technical price support. 1) Trade volume in corn increased during sell-offs last week, usually a bearish technical signal.
2) Weekly export inspections could be bullish for soybeans. 2) The short-term technical pattern for soybeans is growing more bearish.
3) Weather could continue to bring buyers to spring wheat, providing spillover support to winter wheat markets. 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 New-crop December corn was showing a small loss early Monday morning, sitting near the midpoint of its 6-cent overnight trading range. Technically the contract continues to hold minor (short-term) support on its daily chart at $3.84 1/4, though last week's trade volume could be seen as a bearish influence. This trade volume increased on days the market sold off, and decreased on Friday as it tried to rally. Also, last Friday's CFTC Commitments of Traders report showed noncommercial traders adding 132,265 contracts to their net-long position (as of Tuesday, July 11), a huge addition over one week's time. However, this was likely trimmed back during the sell-off seen Wednesday and Thursday. Fundamentally, Dec corn is likely to find buying interest tied to empty weather maps for much of the U.S. Midwest growing area ahead of Monday afternoon's weekly crop condition numbers from NASS.

SOYBEANS Soybean contracts were "in the pink" early Monday morning, or in other words showing a small loss as compared to the more sizeable sell-off see shortly after Sunday evening's open. However, the daily chart for new-crop November shows a minor (short-term) bearish consolidation pattern forming that would suggest its recently established downtrend should extend. If the pattern plays out as expect, it would suggest Nov beans could test minor retracement support near $9.40 in relatively short order. Fundamentally, traders will take note of late Monday morning's weekly export inspection number (for the week ending Thursday, July 13), more as a pre-cursor to this coming Thursday's weekly export shipment figure. In other news, last Friday's CFTC Commitment of Traders report showed noncommercial interests switching to a net-long futures position just ahead of last Wednesday's USDA reports. This could lead to continued liquidation this week.

WHEAT Winter wheat contracts were showing small losses early Monday morning while Minneapolis spring wheat posted equally small gains. Technically, both nearby September Chicago and Kansas City moved into minor (short-term) downtrends last week, indicating both should stay under pressure this week. Fundamentally, the biggest source of support could be continued harsh weather across the U.S. Northern Plains and Canadian Prairies, keeping buyers interested in spring wheat futures. A potential problem for winter wheat is the growth of the noncommercial net-long futures position, as reported in the latest CFTC Commitment of Trader report. This continues to diverge from a bearish commercial view, indicated by the strong carry in winter wheat forward curves.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.32 $0.07 -$0.44 Sep $0.003
Soybeans: $9.24 $0.14 -$0.65 Aug $0.005
SRW Wheat: $4.78 -$0.01 -$0.33 Sep $0.001
HRW Wheat: $4.46 -$0.01 -$0.67 Sep $0.009
HRS Wheat: $7.18 $0.09 -$0.40 Sep $0.007

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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