DTN Early Word Grains
Turnaround Tuesday and Taxes
July corn was 1 cent higher, July soybeans were 3 cents higher, and July Kansas City (HRW) wheat was 5 cents higher.
CME Globex Recap:For those of you here in the United States, don't forget that this particular Turnaround Tuesday is also Tax Day. The grain and oilseed complex found some buyers overnight, despite a slight rally by the U.S. dollar index. Some markets haven't turned around from Monday, yet, with DJIA futures posting another triple-digit gain and the energy complex edges lower.
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The Dow Jones Industrial Average closed 212.90 points (0.9%) higher at 24,573.04, the NASDAQ Composite gained 49.63 points (0.7%) to 7,156.28, and the S&P 500 rallied 21.54 points (0.8%) to 2,677.84 Monday. DJIA futures were 127 points higher early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 up 12.06 points, Hong Kong's Hang Seng down 252.84 points (0.8%), and China's Shanghai Composite losing 43.86 points (1.4%). European markets were trading mostly higher with London's FTSE 100 up 14.16 points (0.2%), Germany's DAX gaining 98.41 points (0.8%), and France's CAC 40 up 23.30 points (0.4%). The euro was 0.0008 lower at 1.2372 while the U.S. dollar index added 0.05 to 89.49. June 30-year T-Bonds were 3/32 lower at 145'12 while June gold dropped $5.90 to $1,344.80. Crude oil was $0.07 lower at $66.15 as Brent crude slipped $0.11 to $71.31. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.
| BULL | BEAR | ||
| 1) | A lot of analysts continue to point to the large unshipped export sales number as the key bullish factor for old-crop corn. | 1) | Corn markets (cash, old-crop futures, new-crop futures) all look to be nearing downtrends on their respective weekly charts. |
| 2) | After a double-digit sell-off Monday, it is not surprising to see an overnight bounce in soybeans Tuesday. | 2) | Commercial selling put pressure on soybeans Monday, and could do so again during Tuesday's session. |
| 3) | The snow across the spring wheat growing area of the U.S. and Canada is measured in feet/meters rather than inches/centimeters. | 3) | The U.S. Southern Plains is still forecast to see some precipitation later this week, theoretically providing relief for the HRW wheat crop. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Corn contracts initially dipped to new lows, for this sell-off, overnight before spillover support from the rest of the grain and oilseed complex allowed markets to rally. Old-crop July was sitting on its session high, as of this writing, with December corn off the high by about a half-cent. Generally speaking there isn't much new to talk about in corn's futures markets with both July and December in minor (short-term) downtrends on their respective daily charts. However, weekly charts are also poised to turn bearish depending on trade action the rest of the week. As for the DTN National Corn Index (NCI, national average cash price) it remains close to establishing a bearish technical signal on its daily chart, but Monday's lower calculation of the NCI didn't quite pull it off. Like the futures markets though, the NCI does look to be moving into a secondary (intermediate-term) downtrend on its weekly chart.
SOYBEANS U.S. soybean markets were able to rally overnight, not surprising given Monday's double-digit sell-off. After posting a new 4-day low of $10.52 1/2 Monday, and equaling that mark overnight, old-crop July could see a modest recovery early Tuesday. However, the contract remains vulnerable to another round of noncommercial selling for two reasons: First, if commercial selling is seen again during Tuesday's session noncommercial interests could follow; and second, noncommercial traders could spend another day liquidating some of their net-long futures holdings given Tuesday is the cutoff day for this coming Friday's CFTC Commitments of Traders report. Fundamentally the market is little changed, with the strong carry in the May-to-July futures spread reflecting a short-term bearish situation. Of more interest is now the July-to-August spread that saw its inverse erased Monday. If pressure, commercial selling leading to a slightly stronger carry, continues to be seen Tuesday it could be a hint the commercial side is growing more comfortable with the U.S. supply and demand situation through the end of the 2017-2018 marketing year.
WHEAT The wheat complex stabilized overnight with the new-crop July Kansas City contract climbing back above minor (short-term) technical price support on its daily chart at $5.00. However, keep an eye on the KC July-to-September futures spread following Monday's session that saw its carry strengthen to about 20 1/2 cents. This is a bearish, okay very bearish, read on the commercial mood toward new-crop HRW fundamentals, despite the crop being tested by almost every weather feature one can imagine. On the other hand, new-crop September Minneapolis continues to trim the carry held by the December contract as commercial traders register their concern regarding the feet of snow covering unplanted spring wheat acres. Look for the complex in general to continue to find support early Tuesday.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.49 | -$0.03 | -$0.34 | May | $0.003 |
| Soybeans: | $9.71 | -$0.12 | -$0.71 | May | $0.006 |
| SRW Wheat: | $4.31 | -$0.10 | -$0.31 | May | $0.007 |
| HRW Wheat: | $4.39 | -$0.17 | -$0.39 | May | $0.009 |
| HRS Wheat: | $5.95 | -$0.11 | -$0.11 | May | -$0.009 |
Darin Newsom can be reached at darin.newsom@dtn.com
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