DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex: March corn was 1 cent lower, March soybeans were 1 cent higher, and March Chicago wheat was 2 cents lower.

CME Globex Recap: Follow-through buying had soybeans trading higher early Wednesday morning while the other grains took a breather. Outside markets were mixed, though both crude oil and gold were showing gains despite the continued strength of the U.S. dollar index. DJIA futures were also higher, once again setting the table for the Big Board to test 20,000.

OUTSIDE MARKETS: The Dow Jones Industrial Average closed 11.23 points higher at 19,945.04. The NASDAQ composite gained 24.75 points (0.5%) to 5,487.44 and the S&P 500 added 5.09 points (0.2%) to close at 2,269.88 Tuesday. DJIA futures were 32 points higher early Wednesday morning. Asian markets were mixed with Japan's Nikkei down 1.34 points, Hong Kong's Hang Seng was up 179.98 points (0.8%), and China's Shanghai Composite was off 12.43 points (0.4%). European markets were also mixed Wednesday with London's FTSE 100 gaining 26.58 points (0.4%), Germany's DAX off 3.15 points, and France's CAC 40 losing 3.94 points. The U.S. dollar index was 0.26 higher at 103.30. March 30-year T-Bonds were up 4/32 at 148'22 while December gold added $0.10 to $1,138.90. Crude oil added $0.25 to $54.15 while Brent crude was $0.34 higher at $56.43. Dalian soybean and Malaysian palm oil futures were both higher overnight.

BULL	BEAR
1) Marketing year export inspections of corn continue to run 80% ahead of last year's pace.	1) Tuesday's strong rally in corn could be met by light selling Wednesday.
2) Soybeans were able to rally Tuesday on the combined strength of technical and fundamental buying.	2) Soybeans run the risk of exhausting existing buy orders, leaving a bearish vacuum under the market.
3) Total week exports continue to run slightly ahead of projected pace.	3) The continued strength of the U.S. dollar index could put renewed pressure on wheat.

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:

The best way to describe the corn market is to say it is "consolidating." The last 13 weeks have seen the March contract trade between technical support at $3.47 and resistance at $3.67, with only a few minor excursions outside that range. Wednesday morning finds the market giving back a small part of Tuesday's strong rally, a day that culminated with national average basis holding firm despite the near double-digit rally in the futures market. As discussed in Tuesday's closing comments, this could be considered a bullish fundamental sign for corn as it signals continued strength of demand against the backdrop of tightly held supplies. Wednesday's session is expected to be quieter than what was seen to start the week, with traders again keeping an eye on the goings on of the soybean market.

SOYBEANS:

Soybean contracts were showing small gains early Wednesday morning, supported by the continued strength of the global oilseed complex at large. The overnight rally occurred after the market had eased back early, taking a small break from Tuesday's impressive 20-cent plus rally. Technically, the more active March contract has already pulled off a 38.2% (Fibonacci) retracement of the previous short-term downtrend on its daily chart, with the 50% retracement level sitting up at $10.35 1/2. Fundamentally, the strength of the market continues to be strong export demand for U.S. soybeans and ongoing chatter regarding South American weather. As for exports, Tuesday's inspection number of 62.8 million bushels sets the stage for another impressive round of weekly sales and shipments (for the week ending Thursday, Dec. 22) in this coming Friday's holiday-delayed report. However, national average basis needs to be watched closely as the market nears its seasonal winter top before weakening through late April.

WHEAT:

Winter wheat contracts posted new lows late last week, so the obvious follow-through activity would be a double-digit rally coming out of a three-day holiday weekend. Logical only if one is talking about wheat, a complex known for its characteristic technical head fakes. Technically, not much has changed even with Tuesday's impressive move. Wednesday's session is expected to be far quieter with traders keeping an eye on the other grains and the U.S. dollar index as the day progresses.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.18	$0.10	-$0.37	Mar	$0.010
Soybeans:	$9.48	$0.26	-$0.76	Mar	-$0.007
SRW Wheat:	$3.63	$0.18	-$0.46	Mar	$0.016
HRW Wheat:	$3.17	$0.17	-$1.02	Mar	$0.043
HRS Wheat:	$5.01	$0.13	-$0.38	Mar	$0.049

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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