DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

March corn was 1 cent higher, March soybeans were 7 cents higher, and March Chicago (SRW) wheat was fractionally lower.

CME Globex Recap:

Global oilseed markets rallied overnight into Friday morning, led by a solid bounce by Chicago soybeans. China's Dalian soybean futures were also higher, as was Malaysian palm oil and Canadian canola. Corn tried to follow soybeans, as best corn can overnight, while wheat markets drifted lower. Other commodity sectors were under pressure with both metals and energies showing losses while softs were mostly lower. The U.S. dollar and DJIA futures both strengthened ahead of Friday's release of December jobs data (nonfarm payroll, unemployment rate).

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 152.45 points (0.6%) higher at 25,075.13, the NASDAQ Composite gained 12.38 points (0.2%) to 7,077.91, and the S&P 500 added 10.93 points (0.4%) to 2,723.99 Thursday. DJIA futures were 76 points higher early Friday morning. Asian markets closed higher with Japan's Nikkei 225 rallying 208.20 points (0.9%), Hong Kong's Hang Seng gaining 78.16 points (0.3%), and China's Shanghai Composite up 6.04 points (0.2%). European markets were trading higher with London's FTSE 100 adding 24.34 points (0.3%), Germany's DAX up 151.25 points (1.2), and France's CAC 40 gaining 45.70 points (0.8%). The euro lost 0.0017 to 1.2051 as the U.S. dollar index gained 0.17 to 92.03. March 30-year T-Bonds were 5/32 lower at 152'05 while February gold fell $3.60 to $1,318.00. Crude oil was $0.61 lower at $61.40 while Brent crude lost $0.67 to $67.40. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

	BULL		BEAR
1)	Spillover buying from soybeans could support corn Friday.	1)	Old-crop corn futures spreads continue to cover a bearish level of calculated full commercial carry.
2)	New-crop November soybeans posted a short-term bullish breakout overnight, indicating it is poised to extend the minor uptrend on its daily chart.	2)	The commercial view of new-crop soybeans continues to grow more bearish.
3)	New-crop winter wheat contracts remain in uptrends on their respective weekly charts.	3)	New-crop winter wheat futures spreads 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 didn't do much overnight as the nearby March contract continues to move sideways in a range of roughly $3.55 to $3.50. When, or if, the contract breaks out of this range the upside target becomes $3.60 with the downside near $3.45. The past few weeks have seen 2017-2018 futures spreads stabilize, though at a bearish level of carry. Both the March-to-May and May-to-July are showing greater than 70% of calculated full commercial carry while national average basis continues to firm. Those that have rolled hedges against 2017 production to the July contract are looking at an average basis (DTN National Corn Index - July futures) reading of 50 1/2 cents under as compared to 57 1/2 cents under a month ago. Friday's session could see corn continue to follow the soybean market.

SOYBEANS The rally in soybeans overnight was highlighted by a short-term bullish breakout by the new-crop November contract, as discussed in this past Wednesday's Technically Speaking blog on DTN. Nov beans' move above its previous high of $9.87 1/4 led to an immediate test of resistance at $9.90 1/2 (overnight high of $9.90 3/4) and projects to an extended short-term uptrend to near $10.03. While short-term new-crop fundamentals remain bearish, as indicated by the carry in the March-to-May futures spread, the May-to-July has seen its carry weaken to a neutral level of calculated full commercial carry. Meanwhile, the November-to-January futures spread continues to trend down (strengthening carry) reflecting an increasingly bearish view of new-crop fundamentals.

WHEAT Winter wheat markets were unchanged (Kansas City HRW) to fractionally lower Chicago (SRW) early Friday morning. Traders showed little interest in following global oilseeds higher, yet also weren't interested in pushing contracts lower. Despite a sluggish start to Friday both new-crop July Kansas City and Chicago remain in uptrends on their respective weekly charts. The initial upside target for HRW is $4.83 1/2 with Chicago's sitting at $4.77 3/4. Overnight trade in Chicago spreads hint at light commercial selling, though as often said in this space low volume can skew spread results. As always, continue to keep an eye on new-crop spreads as an indicator of commercial traders' level of concern over recent cold weather.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.17	-$0.02	-$0.34	Mar	$0.002
Soybeans:	$8.96	-$0.01	-$0.72	Mar	-$0.003
SRW Wheat:	$4.02	-$0.01	-$0.32	Mar	$0.009
HRW Wheat:	$3.90	-$0.01	-$0.50	Mar	-$0.002
HRS Wheat:	$6.06	$0.08	-$0.22	Mar	$0.003

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

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

(BAS)

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