DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was 3 cents lower, November soybeans were 8 cents higher, and September Minneapolis (HRS) wheat was 13 cents lower.

CME Globex Recap:

After a sharply higher Monday evening open corn spent much of the session through early morning in reverse while soybeans fought to hold the minimum double-digit gain. The initial catalyst was NASS' lower weekly crop condition numbers with pressure tied to forecasts that have taken some of the extreme heat out of the U.S. Midwest. In other news the FOMC starts a two-day meeting Tuesday though odds are not favoring an interest rate increase. The U.S. dollar index was under light pressure while DJIA futures were higher.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 66.90 points (0.3%) lower at 21,513.17, the NASDAQ Composite gained 23.05 points (0.4%) to 6,410.81, and the S&P 500 slipped 2.63 points (0.1%) to 2,469.91 Monday. DJIA futures were 19 points higher early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei down 20.47 points (0.1%), Hong Kong's Hang Seng gaining 5.22 points, and China's Shanghai Composite off 6.91 points (0.2%). European markets were trading higher with London's FTSE 100 adding 63.56 points (0.9%), Germany's DAX up 57.99 points (0.5%), and France's CAC 40 gaining 45.96 points (0.9%). The euro was 0.0008 higher at 1.1652 while the U.S. dollar index dipped 0.04 to 94.00. September 30-year T-Bonds were 13/32 lower at 153'27 while August gold lost $3.90 to $1,250.40. Crude oil was $0.55 higher at $46.89 while Brent crude added $0.56 to $49.16. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

	BULL		BEAR
1)	DTN's weekly Crop Condition Index for corn dropped to 147 points, down 5 points from the previous week.	1)	For now, concern over the 2017 corn crop seems to be ebbing.
2)	DTN's weekly Crop Condition Index for soybeans fell to 135 points, 11 points lower than previous week.	2)	More favorable weather conditions across the U.S. Midwest could still salvage the soybean crop.
3)	Nearby winter wheat contracts are testing minor (short-term) technical price support.	3)	Strong commercial selling continues to dominate the spring wheat futures market.

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 NASS' weekly crop condition numbers resulted in a DTN Crop Condition Index for corn of 147 points. This was 5 points below the previous week, and through nine reporting weeks is now showing similar numbers to what was seen in 2011. That was the second year of the three-year drought when the crop eventually, reportedly, saw an average national yield of 146.8 bpa. To add context, this was 5.6% below DTN's calculated national trendline yield. If, and that's a big word given all the variables in play, 2017 yield repeats what was seen in 2011, with DTN's calculated trendline yield of 166.3 bpa, 2017 could see a national average figure of 157 bpa. But that remains a long way down the road, with a lot of weather to get through between now and then. Technically nothing has changed in the market though new-crop December's failed overnight rally has it back in position to test support at $3.84 1/4.

SOYBEANS NASS' weekly crop condition numbers for soybeans resulted in a dramatic 11 point drop in the DTN Crop Condition Index, bringing it in at 135 points. This sparked a sharp 25-cent rally early in the overnight session, though Tuesday morning finds the November contract holding on to only 10 cents (roughly) of that initial gain. Overnight trade saw the new-crop contract test minor (short-term) resistance near $10.32 (a posted high of $10.35 1/2) before falling back. It will be interesting to see if traders show much follow-through concern over the numbers during Tuesday's session, or if attention turns back to weather forecasts calling for slightly cooler and possibly wetter conditions across the U.S. Midwest.

WHEAT The wheat complex struggled overnight into Tuesday morning, once again led by commercial selling in Minneapolis spring wheat. In its Monday afternoon weekly update, NASS estimated spring wheat to be 96% headed. However, there are reports of early harvest getting started creating some of the pressure on both futures and futures spreads. The latter has seen a sharp turn, with the nearby September-to-December now show a 9-cent carry while the inverse in the December-to-March whittle back to only 2 cents. September Chicago wheat remains in a minor (short-term) downtrend on its daily chart, but is testing technical price support between $4.84 and $4.78.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.33	-$0.02	-$0.44	Sep	$0.004
Soybeans:	$9.35	-$0.11	-$0.63	Aug	$0.003
SRW Wheat:	$4.57	-$0.11	-$0.31	Sep	-$0.002
HRW Wheat:	$4.21	-$0.09	-$0.67	Sep	-$0.004
HRS Wheat:	$7.11	-$0.14	-$0.40	Sep	$0.012

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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