DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

March corn was 1 cent higher, January soybeans were 3 cents higher, and March Chicago wheat was 1 cent lower.

CME Globex Recap:

The strong rally seen by the U.S. dollar following Wednesday's Federal Reserve interest rate hike took a breather overnight. The U.S. dollar index slipped back below 103.00, but still sits at a level not previously seen since January 2003. Meanwhile, the DJIA has taken it all in stride with a stronger futures market overnight pointing at another test of the 20K level by the Big Board Friday. Grains were mostly higher, quietly, with only wheat still sitting below unchanged early Friday morning.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 59.71 points (0.3%) higher at 19,852.24. The NASDAQ Composite gained 20.18 points (0.4%) to 5,456.85, and the S&P 500 rallied 8.75 points (0.4%) to close at 2,262.03 Thursday. DJIA futures were 32 points higher Friday morning. Asian markets were mixed with Japan's Nikkei up 127.36 points (0.7%), Hong Kong's Hang Seng Index fell 38.65 points (0.2%), while China's Shanghai Composite gained 5.30 points (0.2%). European markets were mostly higher Friday with London's FTSE 100 up 11.96 points (0.2%), Germany's DAX up 44.16 points (0.4%), and France's CAC 40 gaining 19.54 points (0.4%). The U.S. dollar index was 0.250 lower at 102.850. March 30-year T-Bonds were up 15/32 at 149 while December gold rallied $7.20 to $1,137.00. Crude oil lost $0.16 to $50.74 while Brent crude added $0.01 to $54.03. China's Dalian soybean futures were higher while Malaysian palm oil futures were mixed overnight.

	BULL		BEAR
1)	Spillover buying from soybeans could support the corn market early Friday.	1)	Export demand seems to be slowing for corn.
2)	Strong commercial buying continues to be seen in soybeans, likely tied to Argentine weather forecasts and export demand.	2)	Thursday's rally did not break soybeans out of its short-term downtrend.
3)	If the U.S. dollar index relaxes a bit Friday, wheat could finish in the green.	3)	Wheat doesn't really want to rally, and could fight off potential spillover support throughout the day.

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 It's the same story, different morning for corn as the market posted another quiet overnight session. The nearby March "expanded" its trading range to 2 1/2 cents, though volume was still light at less than 6,300 contracts. New-crop December, with its 2 cent trading range and volume of less than 600 contracts, did no better. Technically all three markets (old-crop futures, cash, and new-crop futures) are trending sideways, waiting for some piece of news to cause a breakout. Friday's session isn't expected to provide such an opportunity. Export demand for U.S. corn remains strong, but seems to be slowing. Concern continues over Argentina's weather, but mostly for its soybean crop. Next week could bring a change in attitude, but it's unlikely given the markets are in holiday mode through the end of the year.

SOYBEANS Soybeans followed up Thursday's rally with continued buying interest overnight. The first piece of bullish news was national average basis, calculated by subtracting the close of the March futures contract off the DTN National Soybean Index (NSI.X, national average cash price), was steady to firm Thursday evening. While still well below average for this time of year, at least basis held its own following the futures. Often, this isn't the case. As for the stronger close by futures Thursday, the rally during the session looked to be led by renewed commercial selling. What were the most likely catalysts? Growing concern over weekend weather forecasts for Argentina and/or new export sales being made. If the latter, look for USDA to release announcements of new sales as soon as later Friday morning. Technically the picture for soybeans didn't change that much, with short-term trends on daily charts still down.

WHEAT Winter wheat markets were lower early Friday morning following a relatively quiet overnight session. Wheat decided not to follow corn and soybeans, or find much solace in the U.S. dollar index taking a breather overnight. Instead the slide that started Thursday as the greenback skyrocketed continued overnight. Pressure could continue to come from both commercial and noncommercial selling, though the latter already holds a substantial net-short futures position of Chicago wheat contracts. On the other hand, it would not be surprising to see wheat close in the green Friday if the U.S. dollar index stays under pressure and the other grains stay firm. A big if all, but still a possibility. The market to watch could be Minneapolis spring wheat as it threatens a possible bearish turn signal on its weekly chart, depending on Friday's close.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.16	-$0.05	-$0.41	Mar	$0.001
Soybeans:	$9.60	$0.06	-$0.69	Jan	$0.009
SRW Wheat:	$3.60	-$0.08	-$0.49	Mar	$0.007
HRW Wheat:	$3.09	-$0.06	-$1.04	Mar	$0.010
HRS Wheat:	$4.98	-$0.04	-$0.40	Mar	-$0.004

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

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

(CZ)

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