DTN Early Word Grains
Red Dirt Road
December corn was 3 cents lower, November soybeans were 15 cents lower, and September Chicago (SRW) wheat was 3 cents lower.
CME Globex Recap:Grain and oilseed markets were back on a familiar path early Thursday morning, with soybeans posting a solid sell-off. As discussed Wednesday, the complex continues to follow technical patterns that would suggest soybeans could be nearing an end to the short-term downtrend. Outside commodities were mixed with softs mostly higher, energies mostly higher, and metals lower.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 52.32 points (0.2%) higher at 22,016.24, the NASDAQ Composite dipped 0.29 to 6,362.65, and the S&P 500 added 1.22 points to 2,477.57 Wednesday. DJIA futures were 8 points lower early Thursday morning. Asian markets closed lower with Japan's Nikkei down 50.78 points (0.3%), Hong Kong's Hang Seng losing 76.37 points (0.3%), and China's Shanghai Composite off 12.13 points (0.4%). European markets were trading mixed with London's FTSE 100 up 7.14 points (0.1%), Germany's DAX off 25.65 points (0.2%), and France's CAC 40 up 10.74 points (0.2%). The euro was 0.0014 lower at 1.1842 while the U.S. dollar index gained 0.04 to 92.93. September 30-year T-Bonds were 3/32 lower at 154'04 while December gold dropped $9.20 to $1,269.20. Crude oil was $0.21 higher at $49.80 while Brent crude added $0.26 to $52.62. China's Dalian soybean and Malaysian palm oil futures were both lower again overnight.
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| BULL | BEAR | ||
| 1) | December corn remains in a technically oversold short-term situation. | 1) | Weekly export shipments of corn could come in slightly below what is needed this week to stay on pace with USDA's July demand projection. |
| 2) | The November soybean contract is nearing the completion of its short-term downtrend. | 2) | November soybeans have a little more room on the downside to complete its short-term downtrend. |
| 3) | Weekly export sales of wheat could come in bullish. | 3) | Strong downtrends continue to be seen in wheat futures spreads, reflecting a more bearish view of long-term supply and demand. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Technically, December corn looks to be nearing the end of its minor (short-term) downtrend from the high of $4.17 1/4 (July 11). Fittingly, it could start to turn the corner to go up again heading into the weekend with the next round of USDA numbers just a week away. Support remains at the previous low of $3.74 (June 23). Fundamentally, weather isn't having the effect it did a couple weeks ago, but lingering dryness across the U.S. Midwest could still light a fire under the market. Also, traders will take note of Thursday's weekly export shipment number (for the week ending Thursday, July 27). Corn needs to see shipments of 40.3 mb (1,023,900 mt) to stay on pace with USDA's demand projection of 2.225 bb. Last week's report showed shipments of 35.2 mb (894,300 mt).
SOYBEANS One of the more interesting aspects of November soybeans is how the contract continues to follow the path lower laid out on its short-term daily chart. Early Thursday morning finds Nov beans testing support at $9.60 1/2, a price that marks the 61.8% retracement level of its previous uptrend from $9.07 through the high of $10.47. Meanwhile, daily stochastics (short-term momentum indicator) have moved into oversold territory below 20%. Also, the contract has dipped into the price gap between $9.58 and $9.63 with its overnight low of $9.60 1/2, a gap that will most likely be filled. The Nov contract should uncover renewed buying interest somewhere between this support and the 76.4% retracement level of $9.40, particularly with the next round of USDA reports set for release Thursday, August 10. As for weekly export shipments, soybeans need to see 17.5 mb (476,900 mt) in Thursday's report (for the week ending Thursday, July 27) to stay on pace with USDA's current demand projection of 2.1 bb. Delivery of 47 contracts was reported against the August issue, putting the total at 2,044 contracts.
WHEAT All three wheat futures markets were lower early Thursday, with the dominant downtrends still those showing for futures spreads on weekly close-only charts. The September-to-December Chicago spread has seen its carry strengthen to about 27 cents, while the same Kansas City spread sits near 28 cents carry, and the Minneapolis spring wheat spread shows a carry of 13 cents. The bottom line is wheat spreads continue to show increasingly bearish fundamentals, regardless of what calculated VSR (variable storage rates) suggest. Though still early in its marketing year, all wheat needs to see weekly export sales (for the week ending Thursday, July 27) of 13.6 mb (369,300 mt) and shipments of 18.2 mb (495,700 mt) to stay on pace with USDA's July projection of 975 mb.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.24 | $0.03 | -$0.41 | Sep | $0.006 |
| Soybeans: | $9.07 | $0.06 | -$0.70 | Nov | $0.000 |
| SRW Wheat: | $4.29 | -$0.01 | -$0.32 | Sep | -$0.005 |
| HRW Wheat: | $3.97 | $0.00 | -$0.68 | Sep | $0.011 |
| HRS Wheat: | $6.79 | $0.03 | -$0.43 | Sep | -$0.009 |
Darin Newsom can be reached at darin.newsom@dtn.com
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