DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

May corn was 4 cents higher, May soybeans were 12 cents higher, and July Kansas City (HRW) wheat was 7 cents higher.

CME Globex Recap:

Similar to last Thursday's post-report bullish reaction in the grain and oilseed complex, old-crop soybeans once again led the way higher coming out of the 3-day holiday weekend. May beans were showing a double-digit gain, with corn and Chicago wheat up 3 cents. Kansas City wheat gained 7 cents. Early Monday morning found energies and metals both higher while DJIA futures and the U.S. dollar index were lower.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 254.69 points (1.1%) higher at 24,103.11, the NASDAQ Composite gained 114.22 points (1.6%) to 7,063.44, and the S&P 500 rallied 35.87 points (1.3%) to 2,640.87 Thursday. DJIA futures were 68 points lower early Monday morning. Asian markets closed mixed with Japan's Nikkei 225 down 65.72 points (0.3%), Hong Kong's Hang Seng closed, and China's Shanghai Composite off 5.72 points (0.2%). European markets were trading higher with London's FTSE 100 up 11.87 points (0.2%), Germany's DAX rallying 156.02 points (1.3%), and France's CAC 40 adding 36.83 points (0.7%). The euro was 0.0005 higher at 1.2329 while the U.S. dollar index dipped 0.07 to 89.91. June 30-year T-Bonds were 11/32 lower at 146'09 while April gold gained $8.10 to $1,330.90. Crude oil was $0.23 higher at $65.17 as Brent crude added $0.40 to $69.74. China's Dalian soybean futures were mixed and Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	Old-crop May corn continues to follow new-crop December corn higher.	1)	The carry in the May-to-July corn futures spread continues to strengthen, reflecting an increasingly bearish commercial view of the market.
2)	Soybeans were once again left off China's list of U.S. commodities it would tariff, adding support to overnight trade.	2)	Old-crop soybeans continue to show bearish fundamentals, when one considers basis and the May-to-July futures spread.
3)	July Kansas City wheat established short-term bullish technical signals last Thursday.	3)	Old-crop wheat quarterly stocks were burdensome in last Thursday's report.

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 Old-crop May corn extended its short-term uptrend overnight and is now in position to test its previous high of $3.95 1/4. Meanwhile, the carry in the May-to-July futures spread continues to strengthen as commercial traders sell into the rally. Last week saw basis stay flat, with Thursday's DTN National Corn Index (national average cash price) coming in at $3.50 3/4, 37 cents under the close of May futures which was unchanged from the previous Friday. Back to the market's short-term uptrends, daily stochastics for both old-crop May and new-crop December are still below the overbought level of 80%, indicating there is more room to the upside. For the December, that means a likely extension to new contract highs.

SOYBEANS The most interesting aspect of the soybean markets (cash, old-crop, and new-crop) is the November-to-January futures spread nearing par and threatening a move to an inverse. The spread continues to reflect a bullish commercial outlook, and one last Thursday's smaller than expected prospective plantings number would support. This could push new-crop November to new contract highs, beyond the overnight mark or $10.60, despite weekly stochastics showing the contract already sharply overbought. The old-crop May-to-July spread continues to show a bearish level of carry, while national average basis strengthened slightly to 77 1/2 cents under (DTN National Soybean Index minus May futures).

WHEAT July Kansas City wheat posted a bullish reversal on its daily chart Thursday, establishing a minor (short-term) uptrend that was extended Sunday night into Monday morning. Initial short-term resistance is now near $5.04 3/4, then $5.19 3/4. Fundamentally, support continues to come from weather across the U.S. Southern Plains, with the area still seeing mostly dry conditions combined with mornings of sub-freezing temperatures. Early Monday morning found all of Kansas in the 20-degree range, though as one farmer from the area put it, "There's nothing left of the crop to freeze."

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.51	$0.14	-$0.37	May	-$0.003
Soybeans:	$9.67	$0.26	-$0.78	May	-$0.006
SRW Wheat:	$4.21	$0.07	-$0.30	May	$0.017
HRW Wheat:	$4.26	$0.06	-$0.41	May	-$0.001
HRS Wheat:	$5.62	-$0.11	-$0.16	May	$0.004

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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