DTN Early Word Grains
Report Week Starts with a Thud
March corn was fractionally lower, March soybeans were 3 cents lower, and March Chicago (SRW) wheat was 3 cents lower.
CME Globex Recap:The grain and oilseed complex was lower overnight into early Monday morning, as USDA report week gets under way. Winter wheat was under the most pressure, followed by soybeans, then corn. Other commodity sectors were mixed with softs and metals lower while energies were higher. The U.S. dollar was stronger and DJIA futures continued their rally.
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The Dow Jones Industrial Average closed 220.74 points (0.9%) higher at 25,295.87, the NASDAQ Composite gained 58.64 points (0.8%) to 7,136.56, and the S&P 500 added 19.16 points (0.7%) to 2,743.15 Friday. DJIA futures were 41 points higher early Monday morning. Asian markets closed higher with Japan's Nikkei 225 closed, Hong Kong's Hang Seng gaining 84.89 points (0.3%), and China's Shanghai Composite rallying 17.73 points (0.5%). European markets were trading mostly higher with London's FTSE 100 off 3.54 points, Germany's DAX up 50.13 points (0.4%), and France's CAC 40 gaining 22.52 points (0.4%). The euro lost 0.0029 to 1.2002 as the U.S. dollar index gained 0.16 to 92.17. March 30-year T-Bonds were 3/32 higher at 151'29 while February gold dipped $0.90 to $1,321.40. Crude oil was $0.36 higher at $61.80 while Brent crude added $0.20 to $67.82. China's Dalian soybean and Malaysian palm oil futures were both higher again overnight.
| BULL | BEAR | ||
| 1) | National average basis continues to firm in corn. | 1) | Old-crop fundamentals remain bearish for corn. |
| 2) | Last week saw soybeans national average basis improve more than 4 cents, while the carry in old-crop futures spreads weakened. | 2) | Soybeans found renewed selling interest near technical retracement price levels. |
| 3) | New-crop winter wheat contracts remain in uptrends on their respective weekly charts. | 3) | New-crop winter wheat futures spreads remain bearish. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Yes, corn was quiet again overnight as old-crop March posted a 1 cent trading range on volume (futures only) of roughly 5,800 contracts. New-crop December also posted a 1-cent trading range through early Monday morning. Technically nothing has changed on daily or weekly charts, with contracts trying to maintain minor (short-term) and strengthen secondary (intermediate-term) uptrends. To this point, neither March nor December have been all that successful. Fundamentally, last week saw national average basis continue to firm with the DTN National Corn Index (NCI, national average cash price) calculated at $3.17 1/4. This put national average basis at 34 cents under the March, 1 1/4 cents stronger than the previous week, and 50 1/4 cents under the July (DTN's Corn Strategy has cash sales and futures hedges rolled to the July contract), 1 1/2 cents stronger than the previous Friday. Look for basis to continue to firm as long as old-crop futures continued to troll along near recent low prices.
SOYBEANS Soybeans were under pressure throughout the overnight session on modest trade volume (futures only). Old-crop March saw 10,100 contracts change hands through early Monday morning while new-crop November registered a meager 500 contracts. Both remain in minor (short-term) uptrends on daily charts with March testing initial resistance near $9.71 1/2. This price marks the 23.6% retracement level of the previous downtrend from $10.27 through the recent low of $9.64 3/4. Last Friday saw new-crop November extend its rally to test the 38.2% retracement level at $9.90 1/2 before falling back. Fundamentally the market has recently found renewed commercial buying interest, indicated by the weakening carry of futures spreads and a firming national average basis. As for the spreads, the May-to-July carry has been trimmed to 9 3/4 cents as DTN's Soybean Strategy still looks to roll at the 11-cent level. DTN's National Soybean Index (NSI, national average cash price) was calculated at $8.99 last Friday, putting it 71 3/4 cents under the March, 4 1/4 cents stronger than national average basis the previous Friday. National average basis was calculated at 82 1/2 cents under the May (for Strategy purposes). Delivery of another 21 contracts was reported against the January issue, putting the total at 106 contracts.
WHEAT Winter wheat markets were lower to start the week, though not to the point of disrupting secondary (intermediate-term) uptrends on weekly charts of new-crop July contracts. However, both July Kansas City (HRW) and July Chicago (SRW) are sitting well below initial resistance near $4.83 1/2 and $4.77 3/4 respectively after rallying the previous three weeks. This continues to illustrate two important market factors: First the degree of the previous downtrend following last summer's spring wheat driven rally and second, the weight of bearish fundamentals new-crop winter wheat has to try to carry uphill. Fundamentally there has been a lot of talk recently regarding potential damage to the crop in the field given much below temperatures across both the U.S. Midwest (SRW) and Southern Plains (HRW), the latter also suffering from ongoing dryness. However, it remains far too early to detect what type of damage may have been due to potential yields this coming summer.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.17 | $0.00 | -$0.34 | Mar | -$0.002 |
| Soybeans: | $8.99 | $0.03 | -$0.72 | Mar | $0.000 |
| SRW Wheat: | $3.99 | -$0.03 | -$0.32 | Mar | $0.002 |
| HRW Wheat: | $3.88 | -$0.02 | -$0.50 | Mar | $0.004 |
| HRS Wheat: | $6.05 | -$0.01 | -$0.21 | Mar | $0.003 |
Darin Newsom can be reached at darin.newsom@dtn.com
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