DTN Early Word Grains

Grains Race Past Winter's Midpoint

6:00 a.m. CME Globex:

March corn was 3 cents higher, March soybeans were 17 cents higher, and July Chicago wheat was 1 cent higher.

CME Globex Recap:

According to the calendar, winter is now half over. Grains started the second-half with a strong rally, once again led by soybeans. Winter wheat was mixed with Kansas City giving back a small part of last week's gains. Softs and metals were mostly higher, with gold up an impressive $20, while the energy complex found renewed buying interest. The U.S. dollar index and DJIA were both under pressure.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 5.27 points lower at 19,885.73. The NASDAQ Composite gained 26.63 points (0.5%) to 5,574.12 and the S&P 500 was up 4.20 points (0.2%) at 2,274.64 Friday. DJIA futures were 101 points lower early Tuesday morning. Asian markets were mixed with Japan's Nikkei down 281.71 points (1.5%), Hong Kong's Hang Seng gained 122.82 points (0.5%), and China's Shanghai Composite added 5.35 points (0.2%). European markets were mostly lower Tuesday with London's FTSE 100 down 24.66 points (0.3%), Germany's DAX off 101.93 points (0.9%), and France's CAC 40 losing 30.70 points (0.6%). The U.S. dollar index was 0.89 lower at 100.68 while the euro was up 0.0089 at 1.0691. March 30-year T-Bonds gained 1 and 5/32 to 153'14 while February gold rallied $21.00 to $1,217.20. Crude oil gained $0.79 to $53.16 while Brent crude was $0.74 higher at $56.60. Dalian soybean and Malaysian palm oil futures were both higher overnight.

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BULL BEAR
1) Corn contracts look to be gaining bullish momentum, possibly enough to test the high-side of recent sideways ranges. 1) Weekly export inspections are expected to be neutral at best for corn.
2) Weekend rains continue to cause problems for Argentina's soybean crop. 2) The soybean market is approaching a technically overbought situation.
3) The sharp sell-off by the U.S. dollar index could keep buyers interested in wheat futures. 3) The weekend ice storm brought much needed moisture to the U.S. winter wheat crop.

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 Corn was higher overnight with contract sitting at or near session highs early Tuesday morning. While the market looks to have gained bullish momentum, mostly by riding the coattails of soybeans, daily charts show both old-crop March and new-crop December nearing an overbought situation with the high-side of recent trading ranges in sight. For March this means $3.67 3/4, December $3.95 1/4. On the other hand, the DTN National Corn Index (NCI.X, national average cash price) remains in an uptrend, testing resistance on its weekly chart between $3.23 1/2 and $3.29 1/4. Last Friday saw the NCI.X calculated at $3.23 1/2, putting national average basis at 34 1/4 cents under the March futures contract, or a penny stronger than the previous week. Tuesday's holiday delayed weekly export inspections are expected to be neutral-to-bullish corn.

SOYBEANS Parts of Argentina's growing area continues to see rain and flooding, sparking a strong double-digit rally in old-crop soybean futures overnight. The March through July contracts were all 17 cents-plus higher, with commercial buying indicated by the weaker carry in the market's forward curve. This suggests that traders are growing more concerned about crop losses, and convinced that USDA's January ending stocks estimate of 420 mb remains overstated. Last week's late rally led to weakening of basis, with the DTN National Soybean Index (NSI.X, national average cash price) calculated at $9.73 3/4 Friday. This put it 72 1/2 cents under the close of the March futures contract. The previous Friday saw national average basis calculated at 71 3/4 cents under. Tuesday's holiday delayed weekly export inspection number is expected to be bullish soybeans.

WHEAT Winter wheat contracts were mixed early Tuesday with Chicago higher and Kansas City lower. New-crop July contracts for both remain in uptrends, with the Kansas City issue already testing initial resistance at $4.72 1/4. The big news for wheat was the weekend ice storm that stretched across the U.S. Southern Plains (HRW) into the heart of the U.S. Midwest (SRW). While troublesome in general, winter ice storms are usually viewed as beneficial for wheat, providing moisture and insulation from the cold. While weekly export inspections, delayed due to Monday's holiday, are expected to be neutral at best, long-term support could still come from USDA's lower than expected winter wheat seedings number of 32.4 mb. Also, spillover buying from Minneapolis spring wheat's strong uptrend could continue to be seen. Last Friday saw national average basis for HRW "strengthen", with the DTN National HRW Wheat Index (national average cash price) calculated at $3.54 1/4, putting it at 94 3/4 cents under the close of the March Kansas City contract. The previous week saw national average basis come in at 95 3/4 cents under.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.24 $0.00 -$0.35 Mar $0.001
Soybeans: $9.74 $0.05 -$0.73 Mar -$0.007
SRW Wheat: $3.87 $0.01 -$0.40 Mar $0.009
HRW Wheat: $3.54 $0.04 -$0.95 Mar -$0.003
HRS Wheat: $5.37 $0.03 -$0.46 Mar -$0.058

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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