DTN Early Word Grains

Spring May Have Finally Arrived

6:00 a.m. CME Globex:

July corn was 2 cents lower, July soybeans were 7 cents lower, and July Kansas City (HRW) wheat was 10 cents lower.

CME Globex Recap:

With planting pictures popping up on the social media site Twitter, and rain expected to start falling in the U.S. Southern Plains, it seems spring may finally have arrived. The grain and oilseed complex responded overnight by selling off as some of the adverse weather support eased. Other commodity sectors were also lower with softs and metals both in the red while energies continue to rally. The U.S. dollar index was stronger overnight while DJIA futures were weaker.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 83.18 points (0.3%) lower at 24,664.89, the NASDAQ Composite lost 57.18 points (0.8%) to 7,238.06, and the S&P 500 fell 15.51 points (0.6%) to 2,693.13 Thursday. DJIA futures were 34 points lower early Friday morning. Asian markets closed lower with Japan's Nikkei 225 down 28.94 points (0.1%), Hong Kong's Hang Seng losing 290.11 points (0.9%), and China's Shanghai Composite falling 45.83 points (1.5%). European markets were trading mostly higher with London's FTSE 100 up 31.04 points (0.4%), Germany's DAX gaining 8.16 points, and France's CAC 40 up 18.48 points (0.3%). The euro was 0.0048 lower at 1.2296 while the U.S. dollar index gained 0.27 to 90.17. June 30-year T-Bonds were 2/32 lower at 143'23 while June gold lost $6.10 to $1,342.60. Crude oil was $0.19 higher at $68.48 as Brent crude gained $0.19 to $73.97. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.

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BULL BEAR
1) Despite recent pressure, corn contracts haven't moved that far off recent highs. 1) Increased commercial selling has been seen in corn this week, indicated by stronger carry in futures spreads.
2) The bullish nugget for soybeans Friday morning is...I can't really think of one right now. 2) Speaking of futures spreads, the July-to-August soybean spread is threatening a move to a downtrend after recently being inverted.
3) If rains across the U.S. Southern Plains disappoint, Kansas City wheat prices could come storming back next week. 3) Forward curves for winter wheat markets remain bearish, regardless of whatever the make believe VSR tries to tell us.

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 Corn was quiet again overnight, with contracts spending the entire session through early Friday morning below Thursday's close. Technically, the argument could be made that new-crop December is in a minor (short-term) downtrend on its daily chart. However, the range is small so far with resistance at the recent high of $4.16 1/2 and support pegged at $4.02 1/4. The latter marks the 38.2% retracement level of the previous uptrend from $3.79 1/4. Fundamentally the only real change in the market is pictures of planters running in parts of the U.S. Midwest. As for old-crop, the carry in both the May-to-July and July-to-September futures spreads continues to strengthen reflecting a more bearish view toward supply and demand.

SOYBEANS Soybeans continued to break down overnight with contracts sitting near session lows early Friday morning. The most notable feature of the soybean market remains the downtrend (strengthening carry) of the May-to-July futures spread. Both the July-to-August and November-to-January (new-crop) are also showing stronger carry, with key support for the former on its weekly close-only chart at 2 1/2 cents. A move below that would set a secondary (intermediate-term) downtrend in motion. New-crop November was also under pressure on ideas spring may finally have arrived. Technically the contract dipped below initial support at $10.38 1/4 on its daily chart, a price that marks the 23.6% retracement level of the previous uptrend from $9.67 1/2 through the high of $10.60. Next support is near $10.24 3/4, then $10.13 3/4.

WHEAT The wheat complex was lower overnight with new-crop July Kansas City (HRW) down almost 10 cents. It's possible traders are looking ahead to what is expected to be a significant spring rainfall event over much of the U.S. Southern Plains this weekend. If the precipitation disappoints though, it could set up an interesting open to the overnight session Sunday evening. The bottom line remains wheat, in general, is fundamentally bearish. Forward curves for both Kansas City and Chicago are showing strong carry, reflecting little concern over the possibility of reduced winter wheat production this year.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.50 -$0.01 -$0.32 May $0.005
Soybeans: $9.68 -$0.03 -$0.70 May $0.011
SRW Wheat: $4.47 $0.02 -$0.30 May $0.007
HRW Wheat: $4.56 $0.07 -$0.39 May $0.000
HRS Wheat: $6.02 -$0.05 -$0.11 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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