DTN Early Word Grains
Welcome to February
March corn was 1 cent lower, March soybeans were 7 cents lower, and July Kansas City wheat was 4 cents lower.
CME Globex Recap:Grains were lower overnight with most contracts at or near session lows early Wednesday morning. Soybeans are showing the most pressure with old-crop March off 6 cents. Outside markets are mostly higher led by a small rally in crude oil. Gold followed up Tuesday's rally with a minor move of about a $1.00. The U.S. dollar index is slightly higher to start the second day of the FOMC meeting while DJIA futures have also rallied.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 107.04 points (0.5%) lower at 19,864.09. The NASDAQ Composite gained 1.07 points to 5,614.79 and the S&P 500 was off 2.03 points (0.1%) at 2,278.87 Tuesday. DJIA futures were 40 points higher early Wednesday morning. Asian markets were mostly higher with Japan's Nikkei up 106.74 points (0.6%), Hong Kong's Hang Seng lost 42.39 points (0.2%), and China's Shanghai Composite remained closed for holiday. European markets were also higher Wednesday with London's FTSE 100 up 53.35 points (0.8%), Germany's DAX rallying 111.98 points (1.0%), and France's CAC 40 gaining 55.84 points (1.2%). The U.S. dollar index was 0.08 higher at 99.63 while the euro dipped 0.0002 to 1.0796. March 30-year T-Bonds lost 13/32 to 150'14 while April gold rallied $1.00 to $1,212.40. Crude oil added $0.21 to $53.02 while Brent crude gained $0.24 to $55.82. Dalian soybean futures remain closed for holiday Malaysian palm oil futures were lower again overnight.
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| BULL | BEAR | ||
| 1) | Corn could see another announcement of small export sales being made. | 1) | Corn's short-term downtrend continues to strengthen. |
| 2) | According to its seasonal indices, the new-crop November soybeans futures contract tends to trend sideways-to-higher during February. | 2) | Brazil's soybean harvest is getting under way. |
| 3) | Wide temperatures swings across the U.S. HRW wheat growing area could spark some chatter about possible winter kill. | 3) | The U.S. dollar index could try to recover part of its recent sell-off, squelching what little buying interest there is in wheat futures. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Wednesday is the first day of February and therefore the first day of calculations for the guaranteed crop insurance price for new-crop. December corn was down slightly overnight, no surprise given the ongoing minor (short-term) downtrend on its daily chart. Minor support is pegged near $3.56 1/2, a price that marks the 50% retracement level of its previous short-term uptrend from $3.41 3/4 through the high of $3.71. If the 50% retracement level doesn't hold, and daily stochastics (short-term momentum study) indicates it won't, next support is down at the 67% retracement level of $3.51 1/2. Fundamentally there isn't much news expected to provide direction to the market, though another announcement of a smallish export sale can't be ruled out.
SOYBEANS As mentioned in the corn commentary today is the first of February, meaning the new-crop soybean crop insurance guaranteed price calculation period is under way. This year finds the November futures contract in the midst of a minor (short-term) downtrend on its daily chart, with next support pegged at $9.93 1/4. This price marks the 76.4% retracement level of the previous minor uptrend from $9.80 3/4 through the high of $10.33 3/4. If this support fails to hold the contract could pull back to a new low, a move that would be in line with its secondary (intermediate-term) downtrend on its weekly charts. However, seasonally Nov beans tend to move sideways-to-up during February. Fundamentally, harvest has begun in South America with all eyes on Brazil's crop. In the January WASDE report Brazil was projected to raise a record 106 mmt, with another update coming in the February reports next week. Traders will continue to monitor South American weather developments, though those seemed to have moved to the back burner for the time being.
WHEAT With little reason to extend Tuesday's recovery rally, winter wheat contracts moved lower again overnight. However, traders will keep an eye on weather forecasts for the U.S. Southern Plains following this last week's climb into the 70-degree range (high temperatures) that reportedly coaxed the crop out of dormancy. Temperatures were back in the teens overnight for much of the area. Whether or not Mother Nature's mood swings are enough to generate much chatter about winter-kill remains to be seen, though it's wheat, meaning it has to die a dozen deaths before it really has a problem. Technically the July contracts for both Chicago and Kansas City remain in minor (short-term) downtrends with the latter expected to test support near $4.42 3/4 in the near future.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.24 | $0.02 | -$0.35 | Mar | $0.004 |
| Soybeans: | $9.49 | $0.02 | -$0.76 | Mar | $0.007 |
| SRW Wheat: | $3.84 | $0.07 | -$0.37 | Mar | $0.006 |
| HRW Wheat: | $3.39 | $0.05 | -$0.90 | Mar | $0.010 |
| HRS Wheat: | $5.09 | -$0.02 | -$0.38 | May | -$0.004 |
Darin Newsom can be reached at darin.newsom@dtn.com
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