DTN Early Word Grains

A Kumbaya Weekend

6:00 a.m. CME Globex:

May corn was 1 cent higher, May soybeans were 12 cents higher, and July Kansas City (HRW) wheat was 5 cents higher.

CME Globex Recap:

Overnight trade reacted to this past weekend's softer talk on trade tariffs with China, sending DJIA futures rocketing almost 200 points higher and rallying soybeans as much as 23 cents during the session. Of course these "good vibes" may last only until the President of the United States tweets again Monday morning. Outside of administrative manipulation, winter wheat rallied on its old friend weather. While an early double-digit rally didn't hold in Kansas City wheat, the market remained firm early Monday.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 572.46 points (2.3%) lower at 23,932.76, the NASDAQ Composite lost 161.44 points (2.3%) to 6,915.11, and the S&P 500 fell 2,604.47 points (2.2%) to 2,604.47 Friday. DJIA futures were 180 points higher early Monday morning. Asian markets closed higher with Japan's Nikkei 225 up 110.74 points (0.5%), Hong Kong's Hang Seng gaining 384.64 points (1.3%) and China's Shanghai Composite adding 7.18 point (0.2%). European markets were trading mostly higher with London's FTSE 100 up 10.51 points (0.1%), Germany's DAX rallying 111.78 points (0.9%), and France's CAC 40 gaining 23.89 points (0.5%). The euro was 0.0009 lower at 1.2273 while the U.S. dollar index gained 0.13 to 90.20. June 30-year T-Bonds were 12/32 lower at 145'21 while June gold lost $5.00 to $1,331.10. Crude oil was $0.12 higher at $62.18 as Brent crude gained $0.23 to $67.34. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

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BULL BEAR
1) National average corn basis strengthened by about 2 1/2 cents last week, hinting at solid demand. 1) Corn seemed to run out of buying interest overnight, opening the door to possible increased pressure Monday.
2) Tough trade war talk between the U.S. and China died down this past weekend, sparking a strong rally in soybeans. 2) Noncommercial traders are holding a net-long position in soybeans usually seen during the latter stages of a summer weather market, increasing the market's vulnerability to a sell-off.
3) Weather remains the bullish force, naturally, in the wheat complex. 3) Winter wheat contracts tested technical resistance overnight, leading to increased selling interest.

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 Technically, short-term daily charts remain a jumble for both old-crop May and new-crop December corn futures (analysis of weekly charts for both, as well as the cash market, can be found in this past weekend's updated Technically Speaking blog on DTN). The clearest daily chart could be for the DTN National Corn Index (NCI, national average cash price), as it only has the settlement price of the index each day. Here we see a sideways trend between the recent high of $3.56 3/4 (March 8) and low of $3.36 3/4 (March 28). Friday's calculation of $3.54 puts the NCI near the high end of that range, supported by a 2 1/2-cent strengthening of national average basis last week. Monday's trade could see corn supported by spillover buying from soybeans, though it would not be surprising to see traders head to the sidelines ahead of Tuesday's monthly USDA Supply and Demand reports.

SOYBEANS Volatility remains the name of the game in the soybean market, where the last 6 session have seen the nearby May contract average a 31-cent trading range. Meanwhile the market's volatility index has climbed to 21.2%, its highest reading since late July 2017. Not surprising is that this volatility is being created by increased noncommercial buying interest, with last Friday's CFTC Commitment of Traders report (legacy, futures only) showing this group holding the largest net-long futures position (210,461 contracts) since mid-July 2016. This position is made even more interesting given the 11-cent carry in the nearby May-to-July futures spread is challenging the strongest carry level for the nearby spread (12 cents) dating back to last fall's record large harvest. Also, USDA's next round of monthly Supply and Demand reports is set for release Tuesday, with all eyes on projected U.S. ending stocks and South American production.

WHEAT The wheat complex was higher early Monday morning, supported by ongoing weather concerns than the latest tweets from the White House. The overnight session started with a double-digit rally in Kansas City (HRW) as new-crop July stuck tested technical resistance at $5.35 1/2. It should also be noted that the July 2019 Kansas City contract hit $6.00 early in the overnight session. After the opening salvo winter wheat seemed to lose some of its momentum, cutting its gains in half. On the other hand, new-crop September Minneapolis (HRS) spring wheat held firm, as snow a cold continue to cast a dark shadow of doubt over the expected increase in planted acres this spring. As discussed in this past weekend's Technically Speaking blog, the September contract looks to have some room to run to the upside as it gains bullish momentum.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.54 -$0.01 -$0.35 May $0.002
Soybeans: $9.62 $0.04 -$0.72 May $0.011
SRW Wheat: $4.42 $0.09 -$0.31 May $0.012
HRW Wheat: $4.66 $0.09 -$0.41 May $0.007
HRS Wheat: $5.95 $0.18 -$0.13 May $0.001

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

(KR)

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