DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

May corn was 1 cent higher, May soybeans were 8 cents higher, and July Kansas City (HRW) wheat was 2 cents lower.

CME Globex Recap:

Soybean meal and soybeans continued to ignore Thursday's promised import tariffs on steel and aluminum, not so thinly veiled at China, and the trade war it could ensure. No, the focus remains on the dry weather across Argentina and the daily murmurings of lower soybean (and therefore soybean meal) production. Corn followed beans higher, at a distance, while wheat gave back a small part of Thursday's impressive rally. Outside markets saw continued downside volatility in DJIA futures while the U.S. dollar index fell back from Thursday's gains.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 420.22 points (1.7%) lower at 24,608.98, the NASDAQ Composite lost 92.45 points (1.3%) to 7,180.56, and the S&P 500 fell 36.16 points (1.3%) to 2,677.67 Thursday. DJIA futures were 235 points lower early Friday morning. Asian markets closed lower with Japan's Nikkei 225 down 542.83 points (2.5%), Hong Kong's Hang Seng falling 460.80 points (1.5%), and China's Shanghai Composite off 19.23 points (0.6%). European markets were trading lower with London's FTSE 100 down 66.95 points (0.9%), Germany's DAX losing 258.48 points (2.1%), and France's CAC 40 dropping 94.67 points (1.8%). The euro was 0.0053 higher at 1.2320 while the U.S. dollar index gave back 0.34 to 89.90. March 30-year T-Bonds were 5/32 higher at 145'16 while April gold gained $18.90 to $1,324.10. Crude oil was $0.01 lower at $60.98 as Brent crude added $0.02 to $63.85. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

	BULL		BEAR
1)	Commercial buying continues to provided support to corn.	1)	Nothing bearish in corn, unless one wants to stop and consider the possibility of ethanol RINS being capped and tied to exports.
2)	No rain in Argentina sends buyers flocking to soybean meal and soybean futures to close out the week.	2)	Nothing bearish in soybeans, unless one wants to stop and consider the looming trade war with China.
3)	July KC wheat should continue to be supported by windy and dry conditions across the U.S. Southern Plains.	3)	Nothing bearish in wheat, unless one wants to stop and consider the U.S. still isn't moving any exports and world supplies are large.

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 Despite being technically overbought on both daily and weekly charts, old-crop May and new-crop December contracts continued to inch higher overnight. Futures spreads hinted at continued commercial buying interest with the carry in the May-to-July (old-crop) and December-to-March (new-crop) weakening. As for technical targets, next up is near $3.92 for the May while Dec sits above its mark of $4.04 1/2, with its sights set on $4.10. Fundamentally the name of the game remains weather, most notably South American problems of drought in Argentina and wet in Brazil. Look for corn to continue to follow soybeans, ignoring most of other headlines for the time being. Delivery of 25 contracts was reported against the March issue, putting the total at 75 contracts.

SOYBEANS In a soybean world where only Argentine rain (or lack thereof) rain matters, it should also be noted that the futures market posted a bullish breakout on its monthly close-only chart Wednesday. This would project a test of the high monthly close of $11.53 1/4 from June 2016. The overnight session saw May beans post an early double-digit rally before pulling back a bit, still showing a solid rally through early Friday morning. Commercial buying has been key to this rally, most notably the strong uptrend (weakening carry) in the November-to-January futures spread. Old-crop May-to-July has also seen its carry weaken, and when combined with the strong rally in futures now covers a neutral 50% of calculated full commercial carry. It will be interesting to see if demand starts to improve enough to warrant this move in spreads. While traders continue to froth over dry weather in Argentina, the possibility of a weekend response from China to President Trump's declaration of import tariffs is strong. Either way, Sunday evening's open should be explosive. Delivery of another 89 contracts was reported against the March soybean issue, putting its total at 291 contracts. March soybean meal saw another 98 contracts delivered (total of 257 contracts) while March soybean oil came in at 1,049 contracts (total of 4,445 contracts).

WHEAT Winter wheat markets were posting small losses early Friday morning, not surprising given the 20-cent rallies seen during Thursday's session. While contracts took a breather overnight, not much has changed fundamentally. The U.S. Southern Plains HRW growing area remains windy and dry, with nothing new in the forecasts over the weekend. Technically, July KC has quickly cleared resistance at $5.31 and $5.53, and may now have its sights set on the $5.80 mark. Beyond that is last summer's spring wheat-fueled high of $6.23.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.50	$0.04	-$0.37	May	$0.000
Soybeans:	$9.89	$0.13	-$0.79	May	$0.002
SRW Wheat:	$4.78	$0.20	-$0.37	May	-$0.009
HRW Wheat:	$4.90	$0.21	-$0.53	May	-$0.004
HRS Wheat:	$6.11	$0.12	-$0.23	May	-$0.005

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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