DTN Early Word Grains
Not Much of a Turnaround Early Tuesday
March corn was fractionally higher, March soybeans were 1 cent higher, and July Kansas City wheat was 1 cent lower.
CME Globex Recap:Corn and soybeans were showing small gains early Tuesday morning in response to Monday's sharp sell-off. Winter wheat was fractionally lower. Outside markets were mixed once again with energies mostly lower and metals higher. The U.S. dollar index was showing a small gains while DJIA futures continue under pressure.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 122.65 points (0.6%) lower at 19,971.13. The NASDAQ Composite lost 47.07 points (0.8%) to 5,613.71 and the S&P 500 was off 13.79 points (0.6%) at 2,280.90 Monday. DJIA futures were 24 points lower early Tuesday morning. Asian markets were lower with Japan's Nikkei down 327.51 points (1.7%). Hong Kong's Hang Seng and China's Shanghai Composite were both closed for holiday. European markets were mostly higher Tuesday with London's FTSE 100 up 35.23 points (0.5%), Germany's DAX rallying 22.57 points (0.2%), and France's CAC 40 gaining 14.63 points (0.3%). The U.S. dollar index was 0.07 higher at 100.44 while the euro gained 0.0010 to 1.0704. March 30-year T-Bonds lost 8/32 to 150'00 while April gold rallied $3.50 to $1,199.50. Crude oil was off $0.25 to $52.38 while Brent crude dipped $0.02 to $55.21. Dalian soybean futures remain closed for holiday Malaysian palm oil futures were lower overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | Export demand remains strong for corn. | 1) | Corn's short-term downtrend continues to strengthen |
| 2) | Monday's export inspections showed continued strong demand for soybeans. | 2) | New-crop November soybeans are showing solid downtrends on both daily and weekly charts. |
| 3) | Parts of the U.S. Southern Plains reached 70 degrees Monday, raising the chances for possible winter-kill of the HRW wheat crop later this winter. | 3) | Export demand for U.S. wheat is running at expected pace, at best. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN The minor (short-term) trend on corn's daily charts remains down with support for old-crop March at $3.56 1/2 and $3.51 1/2. Price support for new-crop December is pegged at $3.85 1/2 and $3.81 3/4. The contracts closed Monday at $3.57 3/4 and $3.85 1/2 respectively. Bearish news for the market is that Monday's sell-off saw a solid increase in volume. On the bullish side, and fundamentally, corn's weekly export inspection figure of 41.8 mb keeps demand running 75% ahead of last year's pace, well ahead of USDA's projected 17% increase. It's possible, possible, that USDA could increase its export demand projection in next week's February round of Supply and Demand reports. Also, Wednesday marks the first day of February bringing with it the early calculation of guaranteed insurance price (through the month of February). It's interesting to note that according to 10-year, 5-year, and 4-year (the last four record crop years) seasonal tendencies new-crop December corn tends to trade flat during February.
SOYBEANS As with corn, soybean daily charts show downtrends that formed late last week and strengthened with Monday's sharp sell-off. Old-crop March fell below support at $10.26, putting its next targets at $10.13 1/4 and its previous low of $9.92 3/4. New-crop November is holding one of its last lines of support at $10.01, for now, though another breakdown sets deeper targets at $9.93 1/4 then its previous low of $9.80 3/4. Also as with corn daily trade volume picked up Monday, a bearish technical sign. Offsetting this, at least a little, is the continued bullish pace of export demand. Monday's weekly export inspection number (for the week ending Thursday, January 26) was 59.9 mb, keeping the market 18% ahead of last year's pace as compared to USDA's ongoing projection of a 6% increase. Again, this could set the stage for USDA to up its projection in its February round of supply and demand numbers set for release next week.
WHEAT New-crop July winter wheat contracts for both Chicago and Kansas City are showing solid downtrends on daily charts. Chicago has dipped below support at $4.43, putting its next target at $4.35 1/4. Similarly, Kansas City slid under support at $4.52 1/4 Monday with its sights now set on the next target of $4.42 3/4. Though trade volume increased for both, a bearish technical signal, short-term momentum indicators (daily stochastics) are quickly moving toward oversold levels. This could actually be viewed as mildly bullish, from a technical standpoint, as it implies selling interest could soon start to wane. Fundamentally winter wheat could get interesting over coming weeks. Parts of the U.S. Southern Plains HRW growing area reached 70 degrees Monday, continuing to coax the crop in the field out of dormancy. In late January. This is the perfect setup for another normal winter cold snap to ignite talk of possible winter-kill at some point. And with planted acres well below last year, it could be enough to strengthen the uptrend still seen on weekly charts (see this past weekend's Technically Speaking blog on wheat's weekly charts).
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.22 | -$0.05 | -$0.36 | Mar | -$0.002 |
| Soybeans: | $9.46 | -$0.26 | -$0.76 | Mar | $0.000 |
| SRW Wheat: | $3.77 | -$0.05 | -$0.37 | Mar | $0.014 |
| HRW Wheat: | $3.34 | -$0.07 | -$0.91 | Mar | $0.017 |
| HRS Wheat: | $5.11 | -$0.06 | -$0.38 | May | $0.002 |
Darin Newsom can be reached at darin.newsom@dtn.com
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