DTN Early Word Grains
Happy New Year!
March corn was unchanged, March soybeans were 4 cents lower, and March Chicago wheat was fractionally lower.
CME Globex Recap:2017 started off with a bang as soybeans rallied a quick 7 cents shortly after Monday evening's open. The other grains were also higher. However, Chicago soybeans couldn't hold gains as China's Dalian market traded lower. Crude oil posted a strong overnight rally through early Tuesday morning on news that Kuwait has actually cut its production. The U.S. dollar index was showing a strong rally, picking up in 2017 where it left off in 2016.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 57.18 points (0.3%) lower at 19,762.60. The NASDAQ Composite fell 48.97 points (0.9%) to 5,383.12 and the S&P 500 slipped 10.43 points (0.5%) to close at 2,238.83 Friday. DJIA futures were 126 points higher early Monday morning. Asian markets were mostly higher with Japan's Nikkei closed for holiday, Hong Kong's Hang Seng was up 149.84 points (0.7%), and China's Shanghai Composite rallied 32.28 points (1.0%). European markets were also mostly higher Monday with London's FTSE 100 gaining 23.31points (0.3%), Germany's DAX off 5.31 points, and France's CAC 40 adding 19.29 points (0.4%). The U.S. dollar index was 0.52 higher at 103.32. March 30-year T-Bonds were down 1 18/32 at 149'03 while February gold lost $3.50 to $1,148.20. Crude oil added $1.21 to $54.93 while Brent crude was $1.27 higher at $58.09. Dalian soybean futures were lower while Malaysian palm oil futures were higher overnight.
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| BULL | BEAR | ||
| 1) | Marketing year total export inspections are expected to be bullish for corn. | 1) | Spillover pressure from soybeans could pull corn lower Tuesday. |
| 2) | Export demand is expected to stay strong for U.S. soybeans. | 2) | Technically the soybean market is nearing the next stage of its downtrend. |
| 3) | Cold weather covering much of the U.S. winter wheat growing area could provide light support to the markets. | 3) | The stronger U.S. dollar index is expected to keep winter wheat markets on the defensive. |
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 COMMENTSCORN It's a different year, yet the same story for corn. The market was quiet overnight, which in the grand scheme of things may not be a bad thing. Old-crop March posted a 2 1/2-cent trading range on volume of 6,500 contracts. Technically the market looks like it wants to rally off the low end of its sideways trading pattern near $3.47 with the high side still up near $3.67. Fundamentally the story remains export demand, with stronger national average basis last week indicating another round of solid export numbers this week starting with Tuesday's holiday-delayed inspections report. The DTN National Corn Index (national average cash price) was calculated at $3.15 1/4 Friday evening, putting basis at 36 3/4 cents under the March futures contract as compared to the previous Friday's 28 1/2 cents under. A possible Tuesday rally could be dulled if the soybean market remains under pressure.
SOYBEANS The soybean market was lower early Tuesday morning with most contracts near session lows. Initial support for old-crop March is its 4-week low of $9.97, with retracement support between $9.92 3/4 and $9.81. Similarly, new-crop November has initial support at $9.81, then all the way back at $9.50. While weekly export inspections (for the week ending Thursday, December 29) are expected to be strong, commercial selling continues to pressure the market. Futures spreads continue to trend down (strengthening carry) which could eventually lead to seasonal weakening of basis. This week will see traders continue to monitor South American weather forecasts while also keeping an eye on the Twitter war of words the president-elect is having with China. Delivery of 100 contracts was reported against the January soybean contract, putting the total at 100 contracts. Another 841 contracts were reported delivered against Jan bean oil, putting its total to 2,485 contracts. Jan soybean meal reportedly had 69 contracts delivered, upping its total to 172 contracts.
WHEAT Winter wheat contracts were fractionally lower early Tuesday morning following a relatively quiet overnight session. The wheat complex remains in the same situation as it begins a new year as it was when it ended the old: Generally bearish global fundamentals has futures near long-term lows, national average basis is running at or below its weakest five-year levels, and the stronger U.S. dollar index remains a problem for increasing demand for U.S. supplies. Traders will keep an eye on weather across the U.S. Southern Plains and Midwest as the first arctic blast of 2017 moves in over a crop with little-to-no snow cover.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.15 | $0.03 | -$0.37 | Mar | $0.008 |
| Soybeans: | $9.31 | -$0.07 | -$0.73 | Mar | $0.021 |
| SRW Wheat: | $3.65 | $0.04 | -$0.43 | Mar | $0.011 |
| HRW Wheat: | $3.19 | $0.04 | -$0.99 | Mar | $0.004 |
| HRS Wheat: | $5.03 | $0.03 | -$0.35 | Mar | $0.005 |
Darin Newsom can be reached at darin.newsom@dtn.com
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