DTN Early Word Grains         05/17 05:51

   Grain Markets Higher Friday on Planting Delays, Strength in Palm Oil and 
European Wheat Contracts

   July corn is up 2 3/4 cents per bushel, July soybeans are up 11 cents, July 
KC wheat is up 11 1/4 cents, July Chicago wheat is up 9 1/2 cents and July 
Minneapolis wheat is up 6 1/2 cents. 

Kent Beadle, DTN Contributing Analyst

   EARLY MORNING GLOBEX NET CHANGES: July corn is up 2 3/4 cents per bushel, 
July soybeans are up 11 cents, July KC wheat is up 11 1/4 cents, July Chicago 
wheat is up 9 1/2 cents and July Minneapolis wheat is up 6 1/2 cents.

   CME GLOBEX RECAP: World equity markets are mixed Friday morning, after U.S. 
markets on Thursday retreated from lifetime highs to close the day slightly 
lower. Continued uncertainty around the direction of the economy and the timing 
of interest rate cuts from the Fed was responsible for the late session 
weakness. Thursday's economic news provided mostly worse than expected economic 
data. Friday morning, we will get the U.S. leading economic indicators at 7:30 
a.m. CDT.

   OUTSIDE MARKETS: Previous closes Thursday showed the Dow Jones Industrial 
Average down 38.62 at 39,869.38 and the S&P 500 down 11.05 at 5,297.10, The 
10-Year Treasury yield ended at 4.595%. Early Friday, the June Dow Jones 
Futures are down 6 points. European markets are lower with the spot futures of 
London's FTSE 100 trading down 0.31%, spot futures of Germany's DAX is trading 
down 0.37% and the spot futures of France's CAC 40 Index down 0.44%. Asian 
markets are mixed with Japan's Nikkei 225 Index down 0.34% and China's Shanghai 
Composite Index up 1.01%.

   The June Euro is down 0.003 at 1.086 and the June U.S. Dollar Index is up 
0.300 at 104.645. The June 30-Year T-Bond is down 7/32nds, while June gold is 
up $1.60 at $2,387.10 and June crude oil is up $0.01 at $79.24. On China's 
Dalian Exchange, July corn was steady, while July soybeans were up 0.32%, 
September soybean meal was up 0.25% and July Malaysian Palm Oil was trading up 
2.13%.

   BULL                                   BEAR
   U.S. average corn basis levels are     Weekly export sales of corn have
   moving higher as the correction in     slowed as of late, despite Thursday's
1) corn futures has slowed farmer      1) large sale to Mexico.
   selling.

   Palm oil and soybean oil both held
   support near contract lows and are     Wheat and corn are correcting their
   now threatening to post higher         recent rallies, as selling interest
2) weekly closes, a good technical     2) this week has been strong on
   signal that the bear market in         intra-day strength.
   veg-oil may be ending.

   World weather still skews bullish      The Wheat Quality Council crop tour
   as planting progress will remain       of Kansas provided crop estimates
   slow due to rains in the Corn Belt;    that said the potential of this
3) southern KS, OK, and TX remain dry; 3) year's crop was 46.5 bushels per acre
   southern Brazil flooding persists;     with total production 22.5 million
   and Mato Grosso remains dry.           bushels (mb) above the current USDA
                                          estimate.



   MORE COMMODITY-SPECIFIC COMMENTS

   CORN: 

   Corn is higher as some support has developed at the 100-day moving average 
which is at $4.56 1/4 Friday. The market is on a three-day losing streak as 
early strength in each session found selling in the form of farmer selling, and 
some profit taking from recent new longs. Thursday's export sales report was a 
little disappointing, down 17% from last week and down 14% from the four-week 
average. Total sales were 29.2 mb with shipments at 37.5 mb. With the higher 
USDA export estimate from last week, we need to average about 40 mb of 
shipments per week and we fell short of that objective.

   For the week, corn is down about 10 cents from last Friday's settlement but 
is still trending higher with the large speculative position still likely net 
short. We will get a read on their position as of Tuesday's close Friday 
afternoon at 2:00 p.m. CDT.

   SOYBEANS: 

   Soybeans are higher Friday morning, trading in a more range-bound fashion 
this week, with support at $12.04 and resistance at $12.33. The last two 
sessions the July contract has found support at the 100-day moving average 
which is at $12.10 Friday. We are seeing a rebound in palm oil and soybean oil 
futures which is helping to provide some support. Meal prices are also higher, 
but they are still 50 cents/ton lower for the week and are pressing down on 
processing margins which are down about 5 cents/bushel this week. Those gross 
margins are down over a dollar from the highs seen over the past 2 years, and 
the pace of the crush has been impacted as was seen in the NOPA numbers earlier 
this week.

   Export sales reported Thursday morning were 9.8 mb, with shipments at 16.3 
mb. The gap between last year's pace and this year's pace has been closing, and 
we are now down 16% from a year ago which is close to the forecast from the 
USDA.

   WHEAT:

   Wheat futures are higher Friday morning as they have been most mornings this 
week. Early strength in wheat futures has found aggressive selling over the 
course of the week, as some traders think that current prices have fully priced 
in the weather issues that have developed here and around the world. The Kansas 
wheat tour wrapped up Thursday and their projection for wheat yield potential 
was forecast at 46.5 bushels per acre, with a total Kansas crop of 290.4 mb. 
The USDA in their May outlook forecast Kansas yields at 38 bushels per acre 
with total production of 267.9 mb. The forecast from the wheat tour is a 
forecast of potential, which could make their numbers a "best case" forecast. 
Meanwhile, the current seven-day forecast looks dry for much of the HRW region.

              DTN Cash   Change From    National      Contract   Change from
Commodity     Index      Prev Day       Avg. Basis    Month      Prev Day
Corn:         $4.34      -$0.05         -$0.23        Jul        $0.007
Soybeans:     $11.53     $0.03          -$0.63        Jul        $0.003
SRW Wheat:    $6.03      -$0.02         -$0.60        Jul        $0.000
HRW Wheat:    $6.21      -$0.02         -$0.52        Jul        -$0.005
HRS Wheat:    $6.86      -$0.07         -$0.35        Jul        -$0.003

   Kent Beadle can be reached at kentbeadle@gmail.com




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