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 July Kansas City wheat was 1 cent lower.

CME Globex Recap:

China's weeklong Lunar New Year holiday has come to an end, sparking a rally of 7 cents in the soybean market overnight. However, grains couldn't hold initial rallies with all three major markets showing losses early Friday morning. Though the U.S. dollar index was higher, financial markets in general were tentative ahead of Friday's release of January jobs data (nonfarm payroll, unemployment rate, average hourly earnings). Gold was lower while crude oil continued its rally overnight.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 6.03 points lower at 19,884.91. The NASDAQ Composite dipped 6.45 points (0.1%) to 5,636.20 and the S&P 500 added 1.30 points to 2,280.85 Thursday. DJIA futures were 21 points higher early Friday morning. Asian markets were mixed with Japan's Nikkei up 3.62 points, Hong Kong's Hang Seng lost 55.31 points (0.2%), and China's Shanghai Composite slipped 19.00 points (0.6%). European markets were higher Friday with London's FTSE 100 up 31.62 points (0.4%), Germany's DAX rallying 14.59 points (0.1%), and France's CAC 40 gaining 34.80 points (0.7%). The U.S. dollar index was 0.242 higher at 100.060 while the euro lost 0.0021 to 1.0729. March 30-year T-Bonds lost 13/32 to 150'05 while April gold fell $4.50 to $1,214.90. Crude oil added $0.27 to $53.81 while Brent crude gained $0.30 to $56.86. Dalian soybean futures were higher while Malaysian palm oil futures were lower overnight.

	BULL		BEAR
1)	Export demand for corn remains solid.	1)	Possible spillover pressure from soybeans could pull corn lower Friday.
2)	China's weeklong Lunar New Year holiday has come to an end, possibly providing a spark to the soybean market.	2)	The short-term downtrend on soybean daily charts could gain momentum heading into a South American harvest weekend.
3)	Uncertainty over the situation in Ukraine has brought renewed buying to the Chicago wheat market this week.	3)	Similar to soybeans, short-term trends on wheat's daily charts remain down.

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MORE COMMODITY-SPECIFIC COMMENTS

CORN Corn has slipped back into a sideways pattern on its daily charts, though the ranges are higher than the previous sideways trend. March is now stuck between support near $3.56 and resistance at its most recent high of $3.71 (January 24), while new-crop December bounces between $3.85 1/2 and $3.96 3/4. Fundamentally not much has changed, with export demand still solid for old-crop. Thursday's weekly export sales and shipment numbers (for the week ending Thursday, January 26) showed total sales 1.583 bb, or 71% of USDA's current marketing year projection of 2.225 bb. The three-year average is for corn sales to be 63% of USDA's projection at this point. Total shipments of 775 mb are 35% of projected, also ahead of the three-year average of 29%. The continued strength of exports opens the door for USDA to increase its projection in next week's February round of Supply and Demand reports. As for Friday's session, it would not be surprising to see corn duplicate Thursday's action by posting a narrow range on either side of unchanged.

SOYBEANS Soybeans remain an interesting technical study, showing a classic three days against the prevailing trend equating to Wave B (second wave) of a 3-Wave downtrend. If so the overnight high of $10.44 1/4 (old-crop March) should be the peak, leading to another sharp sell-off in the near future. Technical support remains at $10.26, then $10.13 1/4 with the Wave A low at $10.17 (February 1). Fundamentally, the market was expected to get a boost from China being back in the market after its weeklong Lunar New Year holiday. Thursday's weekly export sales and shipment numbers (for the week ending Thursday, January 26) showed no significant slowdown, with marketing year total sales and total shipments (as a percent of USDA's current projection) running 1% and 2% ahead of 3-year averages respectively. The real battle begins now though with China's holiday over and Brazil's harvest gaining momentum. Similar to old-crop, technically, new-crop November remains in a short-term downtrend on its daily chart.

WHEAT Winter wheat contracts were quietly lower overnight, though traders will keep a close eye on the U.S. dollar index as it reacts to January jobs data set for release Friday morning (7:30 CT). Similar to the discussion in soybeans, new-crop winter wheat futures have seen a three-day rally against the prevailing minor (short-term) downtrend on daily charts. This sets the stage for renewed pressure to close out the week, with the expected action an eventual move to a test of support at $4.42 3/4 (July KC contract). Fundamentally, wheat traders will continue to monitor the situation in Ukraine following this week's reports of new fighting with Russian backed separatists. There is also domestic weather to contend with as the U.S. Southern Plains HRW growing area continues to see wild temperature swings. Forecasts for the weekend are calling for continued above normal highs.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.32	-$0.01	-$0.36	Mar	$0.002
Soybeans:	$9.61	$0.01	-$0.76	Mar	$0.010
SRW Wheat:	$3.96	$0.00	-$0.38	Mar	-$0.008
HRW Wheat:	$3.51	$0.04	-$0.93	Mar	$0.010
HRS Wheat:	$5.21	$0.04	-$0.38	May	-$0.003

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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