DTN Early Word Grains
It's All About the Beans
March corn was 1 cent lower, March soybeans were 14 cents higher, and July Kansas City (HRW) wheat was 3 cents higher.
CME Globex Recap:Another mostly dry weekend in Argentina sparked a strong overnight rally in soybean meal and soybeans overnight into Tuesday morning. Wheat markets were also higher, though Kansas City lost some of its early gains, while corn could muster only a 1 cent rally. In other news, the U.S. dollar index rocketed higher putting pressure on the metals complex. Energies were mixed while DJIA futures showed triple-digit losses.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 19.01 points higher at 25,219.38, the NASDAQ Composite lost 16.96 points (0.2%) to 7,239.47, and the S&P 500 added 1.02 points to 2,732.22 Friday. DJIA futures were 188 points lower early Tuesday morning, hinting at another volatile session. Asian markets closed lower with Japan's Nikkei 225 down 224.11 points (1.0%), Hong Kong's Hang Seng off 241.80 points (0.8%), and China's Shanghai Composite closed for holiday. European markets were trading mixed with London's FTSE 100 down 15.45 points (0.2%), Germany's DAX up 7.58 points, and France's CAC 40 gaining 11.83 points (0.2%). The euro was 0.0070 lower at 1.233 while the U.S. dollar index rallied 0.47 to 89.66. March 30-year T-Bonds were 12/32 lower at 143'27 while April gold fell $16.30 to $1,339.30. Crude oil was $0.19 higher at $61.87 and Brent crude dropped $0.80 to $64.87. China's Dalian soybean futures were closed and Malaysian palm oil futures were lower overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | Corn continues to find support from the rally in soybean meal and soybeans. | 1) | The corn market is overbought on daily and weekly studies. |
| 2) | As long as it remains dry in Argentina, soybean meal and soybeans should continue to rally. | 2) | National average soybean basis is weakening as the futures market continues to rocket higher. |
| 3) | Continued dry weather in the U.S. Southern Plains has buyers back in winter wheat markets. | 3) | Bottom line supply and demand remains bearish for all wheat. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN The corn market continued to creep higher on spillover support from soybeans. Overnight trade saw the more active May contract post a 1 1/4-cent trading range with additional interest possibly coming from light commercial buying. The carry in the May-to-July futures spread weakened slightly, though this, as always, could be a result of low trade volume. Technically the market is short-term overbought, regardless of the daily chart one looks at. However, as long as soybeans remain in a weather market corn is unlikely to come under increased pressure. Fundamentally, national average basis was unchanged last week with the DTN National Corn Index holding at 30 1/2 cents under the close of the March futures contract.
SOYBEANS It's all about South American weather in the soybean complex as another week gets under way. Soybean futures posted strong double-digit gains overnight while March soybean meal moved as much as $10 (per ton) higher though early Tuesday morning. Charts can be thrown out, though long-term monthly studies are finally showing a bullish breakout. Fundamentally the market doesn't look to be as bullish as the rally in futures indicates, though the carry in the May-to-July futures spread is down to covering only 58% of calculated full commercial carry. National average basis weakened by roughly 1 1/4 cents last week with the DTN National Soybean Index coming in 69 3/4 cents under the close of the March futures contract last Friday. If futures continue to rally this week, and are expected to as long as it doesn't rain in Argentina, look for basis to continue to come under pressure.
WHEAT Similar to soybeans, winter wheat continues to find support in dry weather across the U.S. Southern Plains. The initial overnight rally saw July Kansas City (HRW) wheat gain as much as 7 cents before giving half back through early Tuesday morning. Technically the July contract continues to hold above resistance on its weekly chart at $5.10 with the next target up near $5.31. Fundamentally there is little change, with old-crop still pressured by expectations of slower than expected demand leading to larger than projected ending stocks. However, recent weeks have seen an uptick in export business. Look for continued support in winter wheat markets as long as weather forecasts remain dry of the HRW growing area.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.37 | $0.00 | -$0.31 | Mar | $0.002 |
| Soybeans: | $9.52 | -$0.03 | -$0.70 | Mar | $0.000 |
| SRW Wheat: | $4.29 | -$0.03 | -$0.29 | Mar | $0.006 |
| HRW Wheat: | $4.38 | $0.00 | -$0.41 | Mar | -$0.003 |
| HRS Wheat: | $5.90 | -$0.02 | -$0.16 | Mar | $0.008 |
Darin Newsom can be reached at darin.newsom@dtn.com
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