DTN Early Word Grains

Markets Hit Rewind

6:00 a.m. CME Globex:

December corn was 5 cents lower, November soybeans were 7 cents lower, and September Minneapolis (HRS) wheat was 1 cent higher.

CME Globex Recap:

Grains and oilseeds were lower overnight into Friday morning, momentarily rewinding before possible replaying recent weather market Friday activity. Soybeans led the way, as it has for most of the week, with corn in close pursuit. Wheat contracts were near unchanged on continued support from the weakening U.S. dollar. This also helped support outside non-ag markets with both metals and energies mostly higher. Softs were mixed with cotton coming under pressure once again.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 28.97 points (0.1%) lower at 21,611.78, the NASDAQ Composite gained 4.96 points to 6,390.00, and the S&P 500 lost 0.38 point to 2,473.45 Thursday. DJIA futures were 10 points lower early Friday morning. Asian markets closed mostly lower with Japan's Nikkei down 44.84 points (0.2%), Hong Kong's Hang Seng losing 34.12 points (0.1%), and China's Shanghai Composite off 6.88 points (0.2%). European markets were trading mostly lower with London's FTSE 100 adding 6.71 points (0.1%), Germany's DAX down 32.77 points (0.3%), and France's CAC 40 off 17.80 points (0.3%). The euro was up 0.0011 at 1.1642 while the U.S. dollar index fell another 0.12 to 94.12. September 30-year T-Bonds were 19/32 higher at 154'21 while August gold gained $2.10 to $1,247.60. Crude oil was $0.20 higher at $47.12 while Brent crude added $0.25 to $49.55. China's Dalian soybean futures were mostly higher (lower nearby, higher deferred) and Malaysian palm oil futures were lower overnight.

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BULL BEAR
1) December corn's short-term uptrend on its daily chart has strengthened this week. 1) Trade volume on corn's up days continues to be lower than it was on its down days, a bearish technical signal.
2) November soybeans are bordering on a short-term bullish breakout. 2) Despite the recent rally, November soybeans short-term daily chart still looks bearish.
3) Continued pressure on the U.S. dollar could support wheat going into the weekend. 3) Minneapolis spring wheat futures spreads are in sharp downtrends, indicating continued commercial selling.

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 morning's weather radar shows scattered showers stretching from central South Dakota through central Indiana, with rain totals so far relatively light for much of the area. Corn futures were down, as much a factor of Thursday's late rally as the overnight showers, though traders will keep an eye on how much development the latter sees over the course of Friday's session. Given another weather market weekend is fast approaching, corn could stay under pressure if forecasts continue to show chances of rain, setting the stage for an explosive open to Sunday night trade, a calmer Monday, and finally more volatility Monday night into Tuesday after NASS releases its next set of weekly crop condition numbers.

SOYBEANS It's possible the November soybean contract is trying to rejoin its minor (short-term) downtrend early Friday morning. However, to do so means a move below trendline support calculated at $10.04, at least a 23-cent sell-off from Thursday's close. A sell-off to this degree seems unlikely as Friday gets under way, unless a dramatic change is seen in either weekend weather forecasts or the direction of the U.S. dollar. Recent weakness in the latter has helped spark a rally in the Brazilian real, possibly drawing more interest from global buyers (e.g. China) to old-crop U.S. supplies. It needs to be noted that old-crop soybean sales have already climbed to 2.218 bb, as compared to USDA's demand projection of 2.1 bb, with unshipped bushels growing to 246.7 mb through Thursday, July 13. As with corn, soybeans could head into another weather market weekend under pressure, with losses quickly erased Sunday evening depending on how weekend weather actually plays out.

WHEAT Wheat contracts were unchanged to slightly higher early Friday morning, supported by the continued sell-off by the U.S. dollar index. Wheat traders seem exhausted at this point of the week, and rightfully so given the prices swings most contracts have seen. September Chicago has dropped almost 80 cents since its July 5 high of $5.74 1/2, with daily stochastics (short-term momentum study) nearing the oversold level of 20%. Meanwhile, Minneapolis spring wheat has moved from concern over ongoing drought conditions to commercial selling tied to early harvest. Wouldn't it now be ironic if the nearby September contact found support going into the weekend on the idea rains could slow this early stage of harvest?

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.47 $0.09 -$0.44 Sep $0.003
Soybeans: $9.49 $0.14 -$0.64 Aug $0.006
SRW Wheat: $4.74 $0.02 -$0.32 Sep -$0.010
HRW Wheat: $4.37 $0.03 -$0.67 Sep -$0.008
HRS Wheat: $7.37 $0.03 -$0.41 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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