DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

March corn was fractionally lower, March soybeans were 2 cents lower, and March Chicago (SRW) wheat was 2 cents lower.

CME Globex Recap:

The grain and oilseed complex was in the red early Thursday morning, the first time in 2018. Commodities in general were under pressure despite renewed weakness in the U.S. dollar overnight. Energies were mostly lower, with only the West Texas Intermediate crude oil market showing a small gain. Metals, except for copper, were in the red while softs, excluding cotton, found increased selling interest. On the other hand DJIA futures were higher once again, hinting at continued strength in U.S. equities when the Big Board opens later Thursday morning.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 98.67 points (0.4%) higher at 24,922.68, the NASDAQ Composite gained 58.63 points (0.8%) to 7,065.53, and the S&P 500 added 17.25 points (0.6%) to 2,713.06 Wednesday. DJIA futures were 70 points higher early Thursday morning. Asian markets closed higher with Japan's Nikkei 225 rallying 741.39 points (3.3%), Hong Kong's Hang Seng gaining 175.53 points (0.6%), and China's Shanghai Composite up 16.60 points (0.5%). European markets were trading higher with London's FTSE 100 adding 5.30 points, Germany's DAX up 124.80 points (1.0%), and France's CAC 40 gaining 51.69 points (1.0%). The euro added 0.0036 to 1.2049 as the U.S. dollar index lost 0.21 to 91.97. March 30-year T-Bonds were 13/32 lower at 151'29 while February gold dipped $4.50 to $1,314.00. Crude oil was $0.10 higher at $61.73 while Brent crude slipped $0.14 to $67.70. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

	BULL		BEAR
1)	The carry in the March-to-May corn spread continues to weaken, hinting at increased short-term demand.	1)	Though many of corn's factors have turned bullish, they are all trumped by the market's bearish forward curve.
2)	Whispers of concern over Argentina's weather could continue to bring at least light support to the U.S. soybean market.	2)	The carry in the November 2018-to-January 2019 futures spread continues to strengthen.
3)	The most bullish weather factor in winter wheat at this time is the spring-like conditions seen in both Russia and Ukraine.	3)	Forward curves for winter wheat, both Chicago and Kansas City, remain bearish.

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 The corn market was fractionally lower overnight with contracts posting - you guessed it - narrow trading ranges on low trade volume. Old-crop March corn moved only a penny, total, on volume (futures only) of 6,000 contracts. Technically both the March and new-crop December contracts remain in uptrends on daily (short-term) and weekly (intermediate-term) charts, though having difficulty building bullish momentum. The problem for corn, and what continues to limit noncommercial buying interest, is its bearish fundamentals indicated by the strong carry of its forward curve. Having said that, it also needs to be pointed out that the carry in the March-to-May spread has actually been weakening, reflecting increased commercial buying interest. This development fits with the ongoing strengthening of national average basis with both commercial factors hinting at increased demand. A reminder: USDA's weekly export sales and shipment update is delayed until Friday due to this past Monday's holiday.

SOYBEANS It could be a bit of a nervous morning for soybean market bulls Thursday, as the market traded lower overnight on what looked to be renewed commercial selling. Though both old-crop March and new-crop November contracts continue to show short-term uptrends on their respective daily charts, the November issue has fallen back from resistance at $9.87 1/4 after climbing within a 1/2 cent of this mark early Wednesday morning. Lurking below is the triple bottom at $9.70 (for more information on why this is important, see Wednesday's Technically Speaking blog post "Nov Beans Nearing Breakout"). As for commercial pressure, recent sessions have seen 2017-2018 futures spreads stabilize while the carry in new-crop November 2018-to-January 2019 has been strengthening. This continues to paint a bearish long-term fundamental picture for soybeans, a factor that is likely to limit short-term buying interest.

WHEATWinter wheat markets were lower early Thursday morning, due more to a lack of trading interest than anything else. Most of the attention continues to center on recent cold weather across the U.S. Southern Plains (HRW) and Midwest (SRW) growing regions, with early winterkill concerns fueling the uptrend seen on new-crop July contracts for both Kansas City (HRW) and Chicago (SRW). Of greater concern, at least for now, is the spring-like conditions seen across the Black Sea region of Russia and Ukraine, bringing winter wheat crops there out of dormancy. As U.S. growers know, this sets the crop up for a real winterkill situation when winter makes its return. Early Thursday sees winter wheat futures paying little attention to the continued weakness of the U.S. dollar index, though at some point the ongoing downtrend of the latter could spark talk of increased demand for U.S. supplies. And if something happens to the Black Sea crop, given another year of reduced acres in the U.S.? The wheat market could get interesting again.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.19	$0.00	-$0.34	Mar	$0.005
Soybeans:	$8.97	$0.06	-$0.72	Mar	$0.018
SRW Wheat:	$4.03	$0.04	-$0.33	Mar	$0.016
HRW Wheat:	$3.91	$0.07	-$0.50	Mar	$0.005
HRS Wheat:	$5.98	$0.01	-$0.22	Mar	-$0.007

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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