DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

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

CME Globex Recap:

Overnight Sunday through Monday was all about the soybean market. As we start the second leg of this week's race, corn has the bullish baton. Overnight trade saw corn trade a couple cents higher while soybeans were quiet and bean meal was actually lower. Wheat was warming up, gaining back a little bit of the ground it lost the previous day. The energy complex was higher, again, while metals were mostly lower.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 68.24 points (0.3%) higher at 24,899.41, the NASDAQ Composite gained 8.43 points higher (0.1%) to 7,411.32, and the S&P 500 added 2.41 points (0.1%) to 2,730.13 Monday. DJIA futures were 44 points lower early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 down 47.84 points (0.2%), Hong Kong's Hang Seng losing 389.05 points (1.2%), and China's Shanghai Composite adding 18.09 points (0.6%). European markets were trading mixed with London's FTSE 100 up 17.93 points (0.2%), Germany's DAX down 16.47 points (0.1%), and France's CAC 40 up 3.79 points. The euro was 0.0004 lower at 1.1925 as the U.S. dollar index gained 0.07 to 92.74. June 30-year T-Bonds were 11/32 lower at 142'13 while June gold dropped $8.90 to $1,309.30. Crude oil was $0.40 higher at $71.36 while Brent crude gained $0.68 to $78.91. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher again overnight.

	BULL		BEAR
1)	National average corn basis firmed again Monday evening, providing support overnight into early Tuesday morning.	1)	New-crop December corn remains in a secondary (intermediate-term) downtrend on its weekly chart.
2)	July soybeans look to be in position to start a new minor (short-term) uptrend.	2)	The new-crop November soybean contract hasn't positioned itself for a minor (short-term) bullish turn yet.
3)	The "Great White Combine", aka hail, moved through parts of Kansas last night destroying some of the better remaining wheat in its path.	3)	The carry in winter wheat futures spreads remains strong, reflecting a continued bearish view of long-term supply and demand.

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 contracts were higher early Tuesday morning, supported by a slightly stronger national average basis Monday evening. With the nearby July futures contract finishing yesterday unchanged, the DTN National Corn Index (NCI, national average cash price) was calculated near $3.62 for a net daily gain of roughly 3/4 cent. This was enough to keep the NCI from establishing an island top pattern on its weekly chart, and setting the stage for light buying interest during the overnight session. On the other hand, the old-crop July-to-September futures spread remains in a downtrend (increasing carry), reflecting an increasingly bearish short-term view of supply and demand. This could lead to a round of noncommercial long-liquidation, though not likely on Tuesday given it's the end of the week that will be recorded for this coming Friday's CFTC Commitments of Traders report. Delivery of 103 contracts was reported against the May issue, putting the total at 3,036 contracts.

SOYBEANS The soybean market was fractionally higher early Tuesday, stabilizing after Monday's volatile session. While much of Monday's move was due to a rumor of a trade deal between the United States and China, the fact old-crop contracts held solid-double digit gains after the rumor was dispelled by the administration indicated continued support from Argentine weather concerns. Both the old-crop July-to-August and new-crop November-to-January futures spreads have seen an uptick (weakening carry) on their respective weekly close-only charts early this week. Technically, the old-crop July contract looks to have brought about an end to its previous minor (short-term) downtrend and in position to begin a new minor uptrend. The contract, in general, continues to hold minor price support at $10.13. Delivery of 68 contracts was reported against the May issue, putting the total at 1,295 contracts.

WHEAT The wheat complex was showing small gains early Tuesday morning, recovering some of Monday's sell-off. All eyes will be on the July Kansas City (HRW) contract as the "Great White Combine", aka hail, moved across parts of Kansas overnight destroying some of the better wheat in the state. Early Tuesday shows the possibility of light commercial buying as the July issue gains on the September, though this could just as easily be due to low trade volume. From a technical point of view, July KC is in position to stage a rally after moving below technical price support on its daily chart at $5.11 1/2. In true wheat fashion, this could turn out to be another head-fake, or bear trap, ahead of what is expected to be Wave B (second wave) of its minor (short-term) 3-wave downtrend. Delivery of 10 contracts was reported against the May Kansas City issue, putting its total at 891 contracts. Delivery of 16 contracts was reported against the May Chicago issue, putting its total at 67 contracts.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.62	$0.00	-$0.35	Jul	$0.005
Soybeans:	$9.47	$0.15	-$0.70	Jul	$0.003
SRW Wheat:	$4.61	-$0.06	-$0.31	Jul	$0.014
HRW Wheat:	$4.68	-$0.08	-$0.42	Jul	$0.000
HRS Wheat:	$5.90	-$0.03	-$0.12	Jul	$0.002

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

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

(KR)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.