DTN Early Word Grains

A Stampede of Sloths

6:00 a.m. CME Globex:

March corn was fractionally lower, March soybeans were 1 cent lower, and July Kansas City wheat was 2 cents lower.

CME Globex Recap:

Grains didn't do much overnight, with corn contracts posting a sloth-like 1 1/2-cent trading ranges through early Tuesday. Wheat was little better at 2 cents. Grains were lower with only some members of the global oilseed sector trading higher. The U.S. dollar index posted a strong rally overnight on comments from a Federal Reserve official hinting at a possible March rate hike. Metals and energies were posting losses while DJIA futures rallied.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 19.04 points (0.1%) lower at 20,052.42. The NASDAQ Composite lost 3.21 points to 5,663.55 and the S&P 500 dipped 4.86 points (0.2%) to 2,292.56 Monday. DJIA futures were 59 points higher early Tuesday morning. Asian markets were lower with Japan's Nikkei down 65.93 points (0.3%), Hong Kong's Hang Seng lost 16.67 points (0.1%), and China's Shanghai Composite slid 3.90 points (0.1%). European markets were mostly higher Tuesday with London's FTSE 100 up 41.76 points (0.6%), Germany's DAX adding 54.25 points (0.5%), and France's CAC 40 gaining 7.96 points (0.2%). The U.S. dollar index was 0.772 higher at 100.670 while the euro lost 0.0084 to 1.0667. March 30-year T-Bonds lost 9/32 to 151'08 while April gold dipped $1.50 to $1,230.70. Crude oil dropped $0.17 to $52.84 while Brent crude fell $0.16 to $55.56. Dalian soybean futures and Malaysian palm oil futures were both higher again overnight.

BULL BEAR
1) Early chatter is for Thursday's USDA reports to show decreased corn ending stocks projections. 1) Spillover pressure from soybeans could keep corn on the defensive Tuesday.
2) Export demand remains strong for U.S. soybeans, possibly leading to a lower ending stocks projection in Thursday's USDA reports. 2) Weather could start to improve for Brazil's soybean harvest.
3) Early spring-like weather could keep buyers interested in new-crop Kansas City wheat. 3) Renewed strength of the U.S. dollar index could send wheat buyers to the sidelines.

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 As stated above, corn did little overnight with old-crop March posting a 1 1/2-cent trading range on volume of 5,400 contracts through early Tuesday morning. March remains in a minor (short-term) trend on its daily chart, though support continues to slowly ratchet higher. Initial support is now pegged at $3.61 1/4 while resistance remains at the recent high of $3.71. Fundamentally, export demand continues to run well ahead of expected pace following Monday's bullish weekly export inspection figure of 44.5 mb (for the week ending Thursday, February 2). There's also this little thing called USDA's February Supply and Demand report scheduled for this coming Thursday that has led to a quieter market this week. Still, pre-report chatter is that corn ending stocks could be decreased due to continued strong demand. If realized it could push the market into a more seasonal uptrend.

SOYBEANS Soybeans were more active than corn overnight, but not much. Old-crop March posted a 7-cent trading range on volume of 14,100 contracts through early Tuesday morning, with a mid-session rally supported by small rallies in Dalian soybeans and Malaysian palm oil. Technically the March contract looks to have completed Wave B (second wave) of a 3-wave downtrend on its daily chart. The recent consolidation pattern also looks like a bear flag. Both would suggest a possible sell-off to support near $10.13 1/2 if not all the way back to a test of its previous low of $9.92 3/4. What would be the catalyst for such a move given the continued strong demand for U.S. supplies? Improved harvest weather in Brazil and/or a bearish surprise in USDA's February Supply and Demand report set for release Thursday. Traders will also keep an eye on the U.S. dollar/Brazilian real relationship with the former firming again early Tuesday.

WHEAT Winter wheat contracts were lower early Tuesday morning following a relatively quiet overnight session. New-crop July Kansas City (HRW) posted a 1 1/4-cent trading range while its Chicago counterpart was a little more active with a 2-cent range. Technically July KC remains in a minor (short-term) downtrend with support pegged between $4.52 1/4 and $4.42 3/4. These prices mark the 50% and 67% retracement levels of the previous short-term uptrend from $4.23 1/2 through the high of $4.81. Fundamentally, there is little fresh news to provide support for new-crop winter wheat. However, traders could keep an eye on longer-term weather forecasts following the recent move to above normal temperatures across much of the U.S. Southern Plains HRW growing area. Tuesday's session could be dominated by the strength of the U.S. dollar index and a lack of buying interest ahead of Thursday's round of USDA Supply and Demand reports.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.27 -$0.02 -$0.36 Mar -$0.004
Soybeans: $9.60 $0.09 -$0.76 Mar -$0.001
SRW Wheat: $3.85 -$0.07 -$0.38 Mar $0.003
HRW Wheat: $3.43 -$0.05 -$0.92 Mar $0.002
HRS Wheat: $5.16 -$0.02 -$0.38 May -$0.005

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

(BAS)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]