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 3 cents higher.

CME Globex Recap:

As a massive winter storm swirls and blows across the U.S. Southern Plains and Midwest, the grain and oilseed complex traded higher overnight. Soybeans led the way with contracts sitting at or near session highs early Monday morning. Wheat markets were also higher, with Chicago (SRW) taking the lead, while corn also tried to rally. As for the shutdown of the U.S. federal government, the U.S. dollar was weaker overnight and DJIA futures were showing losses.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 53.91 points (0.2%) higher at 26,071.72, the NASDAQ Composite gained 40.33 points (0.5%) to 7,336.38, and the S&P 500 rallied 12.27 points (0.4%) to 2,810.30 Friday. DJIA futures were 51 points lower early Monday morning. Asian markets closed higher with Japan's Nikkei 225 up 8.27 points and China's Shanghai Composite adding 13.50 points (0.4%). European markets were trading mostly higher with London's FTSE 100 up 3.94 points, Germany's DAX up 1.71 points, and France's CAC 40 off 1.41 points. The U.S. dollar index fell another 0.23 to 90.45. March 30-year T-Bonds were 8/32 lower at 148'24 while February gold was unchanged at $1,333.10. Crude oil was $0.03 higher at $63.40 while Brent crude lost $0.02 to $69.59. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	Corn's national average basis continues to firm, and noncommercial traders could continue to cover a portion of their net-short futures holdings.	1)	Old-crop fundamentals remain bearish for corn with firming basis more a function of low futures prices, continued demand, and slow farmer sales.
2)	National average basis also strengthened for soybeans last week, despite the ongoing short-term uptrend on old-crop March's daily chart.	2)	The short-term uptrend in soybeans looks to be nearing its end as it reaches the 50% retracement level of thee previous downtrend.
3)	Much of the U.S. Southern Plains HRW growing area missed out on the blizzard moving across the U.S. this weekend.	3)	The long-term fundamentals of wheat remains bearish, for now.

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 Monday morning, supported by spillover buying from soybeans. Futures spreads indicate most of the interest came from noncommercial traders, likely continued short-covering following last Friday's CFTC Commitment of Traders report (legacy, futures only) that showed this group increasing their net-short futures position to 92,247 contracts through Tuesday, January 16. Overnight trade saw the March contract test its last couple of highs near $3.54 1/2, with a move above this price setting the stage for a possible extension of the minor (short-term) uptrend on its daily chart to near $3.60. Meanwhile, national average basis continues to firm with the DTN National Corn Index (NCI, national average cash price) calculated Friday at $3.20 3/4. This put national average basis at 31 3/4 cents under the March, a penny stronger than the previous week, and 48 1/4 cents under the July (for DTN Strategy purposes), also a penny stronger than the previous week.

SOYBEANS March soybeans extended its minor (short-term) uptrend to test next technical resistance at $9.85 1/2 overnight. This price marks the 50% retracement level of the previous sell-off from $10.27 (December 5) through the spike low of $9.44 1/2 (January 12). Overnight action in futures spreads would suggest at least some of the buying interest came from commercial traders, with the carry in the old-crop forward curve weakening slightly. National average basis firmed last week with the DTN National Soybean Index (NSI, national average cash price) calculated at $9.09 Friday. This put it 68 1/4 cents under the March futures contract, as compared to 70 3/4 cents the previous Friday. It's possible the market could continue to see noncommercial short-covering following last Friday's CFTC Commitment of Traders report (legacy, futures only) that showed this group increasing their net-short futures position to 78,648 contracts through Tuesday, January 16.

WHEAT Winter wheat markets were higher early Monday morning, led by a solid rally in Chicago (SRW). Some of the support was likely spillover noncommercial buying from soybeans and corn, though old-crop March Chicago did gain slightly on the May contract hinting at possible commercial interest as well. Speaking of commercial interests, national average basis firmed again last week with the DTN National SRW Wheat Index (SR, national average cash price) calculated at $3.92 Friday, 30 3/4 cents under the March contract. The previous basis had national average basis at 31 1/2 cents under. The secondary (intermediate-term) uptrend on Kansas City July's weekly chart that began the week of December 11 remains in place, with the contract needing to move beyond its recent high of $4.70 3/4.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.21	$0.01	-$0.32	Mar	-$0.001
Soybeans:	$9.09	$0.04	-$0.68	Mar	-$0.003
SRW Wheat:	$3.92	-$0.03	-$0.31	Mar	-$0.001
HRW Wheat:	$3.84	-$0.02	-$0.43	Mar	$0.004
HRS Wheat:	$5.90	-$0.02	-$0.19	Mar	-$0.002

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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