DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

March corn was 3 cents lower, March soybeans were 13 cents lower, and July Kansas City wheat was 4 cents lower.

CME Globex Recap:

Grains were under pressure early Monday, with contracts not far from overnight session lows. Much of the selling was likely noncommercial, particularly in corn and soybeans following last Friday's CFTC Commitments of Traders report that showed this group adding to their net-long futures positions. Grains lost ground despite a flat U.S. dollar index that helped both crude oil and gold trade higher. DJIA futures were also under light pressure.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 7.13 points lower at 20,093.78. The NASDAQ Composite gained 5.61 points (0.1%) to 5,660.78 and the S&P 500 was off 1.99 points (0.1%) at 2,294.69 Friday. DJIA futures were 45 points lower early Monday morning. Asian markets were mixed with Japan's Nikkei down 98.55 points (0.5%). Hong Kong's Hang Seng and China's Shanghai Composite were both closed for holiday. European markets were lower Monday with London's FTSE 100 down 58.91 points (0.8%), Germany's DAX off 89.84 points (0.8%), and France's CAC 40 losing 42.93 points (0.9%). The U.S. dollar index was unchanged at 100.56 while the euro was off 0.0004 at 1.0694. March 30-year T-Bonds lost 5/32 to 150'07 while April gold rallied $1.60 to $1,192.70. Crude oil gained $0.20 to $53.37 while Brent crude was $0.04 higher at $55.56. Dalian soybean and Malaysian palm oil futures were both closed for holiday.

	BULL		BEAR
1)	The closer the U.S. gets to spring, the closer corn is to possibly seeing reduced acres for 2017.	1)	Weekly export inspections are expected to be neutral at best for corn.
2)	Weekly export inspections of soybeans are expected to still be strong.	2)	China's weeklong national holiday and stable South American weather could be viewed as bearish for soybeans.
3)	With winter wheat contracts still near long-term lows, there is little incentive for increased noncommercial selling.	3)	U.S. stockpiles of wheat should continue to limit buying interest

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 lower overnight, pressured by moderate noncommercial selling interest. Trade volume for the nearby March issue registered at 10,700 contracts early Monday, with futures spreads relatively flat. This implies the market was reacting, at least early in the week, to last Friday's CFTC Commitments of Traders report that showed noncommercial traders adding 39,936 contracts to their net-long futures position, pushing it to 106,737 contracts (as of Tuesday, January 24). Fundamentally the song remains the same with traders watching the pace of exports, weekly inspections will be released later Monday morning, and South American weather. Last Friday the DTN National Corn Index calculated at $3.26 3/4, putting national average basis at 35 3/4 under the close of the March futures contract, unchanged from the previous week.

SOYBEANS As expected, soybean contracts were showing solid losses overnight into Monday morning. "Expected" because this week finds the world's largest buyer, China, on the sidelines for its weeklong national New Year's holiday. Also, weather seems to have stabilized in South America as the equivalent of July here in the Midwest comes to an end and south of the equator's August is set to begin. Last week saw both spreads and national average basis reflect a growing commercial bearishness, with the carry in the former strengthening and the latter weakening. Regarding the latter, the DTN National Soybean Index was calculated at $9.73 3/4 putting national average basis at 76 1/2 cents under, unchanged from the previous Friday. Steady basis at weak levels despite a sell-off in the futures market is not a bullish signal, from a fundamental point of view. Technically, minor (short-term) trends on daily charts for both old-crop March and new-crop November turned down last week (for more information see the weekend update of DTN's Technically Speaking blog).

WHEAT Winter wheat contracts were lower early Monday, following through on bearish short-term technical signals on daily charts from last week. Fundamentally, both Chicago (SRW) and Kansas City (HRW) are dealing with the fact the U.S. continues to hold too much wheat at a time of too little demand. Traders will keep an eye on developments in Australia and Europe, though large scale bullishness isn't expected to emerge in the global marketplace. The U.S. winter wheat crop itself is on the back-burner at this time, with reports of some breaking of dormancy seen in parts of the U.S. Southern Plains setting the table for possible winter kill chatter later. Weekly export inspections are expected to be neutral at best for wheat in general.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.27	-$0.01	-$0.36	Mar	$0.001
Soybeans:	$9.73	$0.00	-$0.76	Mar	$0.001
SRW Wheat:	$3.82	-$0.07	-$0.39	Mar	-$0.001
HRW Wheat:	$3.41	-$0.06	-$0.93	Mar	-$0.002
HRS Wheat:	$5.18	-$0.05	-$0.38	May	-$0.020

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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