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 2 cents lower, and March Chicago wheat was 2 cents lower.

CME Globex Recap:

Grains were quietly lower earl Thursday morning as markets await the release of USDA's January reports. Outside markets were dominated by sharp sell-offs in Japan's Nikkei and the U.S. dollar index. The former had DJIA futures under pressure while the latter added support to metals, energies, softs.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 98.75 points (0.5%) higher at 19,954.28. The NASDAQ Composite gained 11.83 points (0.2%) to 5,563.65 and the S&P 500 was up 6.42 points (0.3%) at 2,275.32 Wednesday. DJIA futures were 50 points lower early Thursday morning. Asian markets were mostly lower with Japan's Nikkei down 229.97 points (1.2%), Hong Kong's Hang Seng lost 106.33 points (0.5%), and China's Shanghai Composite dropped 17.46 points (0.6%). European markets were also mostly lower Thursday with London's FTSE 100 down 13.16 points (0.2%), Germany's DAX losing 52.22 points (0.5%), and France's CAC 40 off 7.36 points (0.2%). The U.S. dollar index was 0.71 lower at 101.02 while the euro was up 0.0064 at 1.0645. March 30-year T-Bonds gained 24/32 at 153'18 while February gold rallied $8.20 to $1,204.80. Crude oil gained $0.40 to $52.65 while Brent crude was $0.53 higher at $55.63. Dalian soybean and Malaysian palm oil futures were both lower overnight.

	BULL		BEAR
1)	Domestic corn production and ending stocks for 2016-2017 are expected to be trimmed slightly.	1)	Brazil's corn production number could be increased slightly from the December WASDE estimate of 86.5 mmt.
2)	Domestic soybean ending stocks for 2016-2017 are expected to start the annual decline.	2)	Brazil's soybean production number is expected to increase from WASDE's December 102 mmt.
3)	Winter wheat planted acres are expected to be the lowest in a century (reportedly).	3)	Global wheat ending stocks are still expected to be burdensome, though the breakout of where these stocks are stored could be important.

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MORE COMMODITY-SPECIFIC COMMENTS

CORN Technically, both old-crop March and new-crop December corn continue to trend sideways heading into Thursday's USDA reports. Traders will keep an eye on the old-crop market, and subsequently the DTN National Corn Index (NCI.X, national average cash price), following the release of the "final" 2016 production, revised supply and demand, and December 1 quarterly stocks numbers. A look at the March and NCI.X weekly charts shows momentum remains up meaning the reports could be a catalyst for futures to test the high side of its trading range at $3.67 and cash extend its uptrend to $3.29. Potential for bullish surprises are most likely in a lower than expected production and quarterly stocks numbers. The latter a result of the former and extraordinary Q1 (September through November) export demand. Speaking of exports, weekly sales and shipments (for the week ending Thursday, January 5) will also be released Thursday morning with marketing year totals expected to still be running ahead of USDA's current projected pace. This opens the door to a possible bullish demand revision in its January estimates.

SOYBEANS Soybean contracts were posting small losses early Thursday, though old-crop March remains in position to resume the uptrend on its weekly charts following the release of USDA's January "final" 2016 production numbers, updated supply and demand tables, and December 1 quarterly stocks. Possibly the most watched domestic number will be 2016-2017 ending stocks to see if USDA starts its annual estimate trimming. If so, it could be a result of increased demand due to a better than expected Q1 export pace. There is also a chance USDA could increase domestic production more than expected. Speaking of production, other numbers that will watched closely are Brazilian and Argentine crop estimates. This week has seen local Brazilian estimates uniformly increase, while concern remains over Argentine weather. The Chinese demand number will also get a quick spotlight. Prior to the big data dump, weekly export sales and shipments (for the week ending Thursday, January 5) are expected to be solid for soybeans again. Delivery of 121 contracts was reported against the January soybean contract, putting the total at 2,523 contracts. Another 174 contracts were reported delivered against Jan bean oil, putting its total to 5,101 contracts. Jan soybean meal reportedly had 239 contracts delivered, upping its total to 1,416 contracts.

WHEAT Winter wheat contracts were showing small losses early Thursday as both Chicago and Kansas City continue to chip away at gains seen earlier in the week. USDA's winter wheat seedings are expected to show the lowest total in a century (reportedly), though any acres still seem to be too many. Otherwise, only small adjustments are expected in both domestic and global supply and demand estimates. Globally, traders will keep an eye on the latest production estimates for Australia and Argentina. In the bigger picture, the U.S. wheat complex could find renewed buying post-reports from the sharp reversal seen in the U.S. dollar index from Wednesday's high through early Thursday morning's low. Weekly export sales and shipments (for the week ending Thursday, January 5) are expected to be neutral to slightly bullish for wheat in general.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.22	-$0.01	-$0.35	Mar	$0.000
Soybeans:	$9.40	-$0.02	-$0.71	Mar	$0.004
SRW Wheat:	$3.79	-$0.08	-$0.40	Mar	$0.003
HRW Wheat:	$3.36	-$0.06	-$0.95	Mar	$0.000
HRS Wheat:	$5.26	-$0.01	-$0.36	Mar	-$0.012

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

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

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