DTN Early Word Grains

It's Raining Again...

Darin Newsom , DTN Senior Analyst
6:00 a.m. CME Globex:

December corn was 2 cents lower, November soybeans were 19 cents lower, and September Chicago wheat was 2 cents lower.

CME Globex Recap:

More rain over the 3-I states overnight into Friday morning had grains on the defensive -- again -- with soybeans posting strong double-digit losses. Outside markets were mostly lower with metals falling and energies mixed. The U.S. dollar index and DJIA futures were both higher early.


The Dow Jones Industrial Average closed 77.80 points lower at 18,517.23, the NASDAQ Composite lost 16.03 points to 5,073.90 and the S&P 500 fell 7.85 points to close at 2,165.17 Thursday. DJIA futures were 28 points higher overnight. Asian markets were mostly lower with Japan's Nikkei down 182.97 points (1.1%) while China's Shanghai Composite lost 26.19 points (0.9%). European markets were also mostly lower with London's FTSE 100 up 9.89 points (0.1%), Germany's DAX was 21.21 points (0.2%) lower, and France's CAC 40 lost 2.72 points. The U.S. dollar index rallied 0.144 to 97.114. Crude oil dipped $0.07 to $44.68 while Brent crude gained $0.06 to $46.26. August gold was $9.00 lower at $1,322.00. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.

1) Dec corn is oversold on both its daily and weekly charts. 1) Corn remains in its seasonal downtrend.
2) Despite this week's pressure, soybeans' forward curve remains bullish. 2) The path of least resistance for soybeans remains down.
3) Light noncommercial short-covering could actually provide support to the wheat complex. 3) Nearly every aspect of the wheat market is bearish, led by the strong carry in futures spreads.

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CORN It's raining again. That means funds will likely be selling again to close out what has already been a bearish week. The December contract moved to a new low of $3.37 3/4 overnight, seemingly on its way to a test of major (long-term) support at the October 2014 low of $3.18 1/4. On the other hand, the contract is now technically oversold on both its short-term daily and intermediate-term weekly charts. Unfortunately this has done nothing to stem the tide of selling from either commercial or noncommercial traders. Regarding the latter, Friday afternoon's weekly CFTC Commitments of Traders report is expected to show sizeable liquidation of their remaining net-long futures position.

SOYBEANS It's raining again. And soybeans are bearing the brunt of the pressure with contracts posting losses near 20 cents early Friday. Such is their punishment for having the audacity to post modest rallies Thursday. November slipped to a new 4-week low $9.92 overnight, setting its sight squarely on next technical support at $9.62. This price marks the 67% retracement level of its previous uptrend from $8.50 through the high of $11.86 1/4. Selling continues to come from both commercial and noncommercial interests, though the latter continues to dominate trade. Friday afternoon's weekly CFTC Commitments of Traders report is expected to show another round of heavy long-liquidation.

WHEAT It's raining again over parts of the U.S. Midwest wheat growing area. But that doesn't really matter to traders given this past Monday's weekly crop progress numbers that showed SRW harvest largely completed. So instead of finding possible light support, the wheat complex followed the rest of the grain complex lower overnight into Friday morning. Additional pressure was likely tied to the stronger U.S. dollar index, though given its bearish fundamentals, wheat doesn't need much of an excuse to go lower.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.04 -$0.03 -$0.30 Sep $0.005
Soybeans: $9.76 $0.04 -$0.37 Nov $0.010
SRW Wheat: $3.85 $0.04 -$0.33 Sep -$0.007
HRW Wheat: $3.18 $0.01 -$0.90 Sep $0.002
HRS Wheat: $4.32 $0.02 -$0.55 Sep $0.003

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

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