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 8 cents higher, and July Kansas City wheat was fractionally higher.

CME Globex Recap:

Global oilseeds in general were higher overnight with only China's Dalian soybean market lagging a bit. A solid rally in the Chicago market didn't appear to help corn and wheat much, with both showing fractional losses again early Wednesday morning. Outside markets were mixed with the energy complex lower while metals were mostly higher. The U.S. dollar index was showing gains again while DJIA futures continued to climb.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 37.87 points (0.2%) higher at 20,090.29. The NASDAQ Composite gained 10.67 points (0.2%) to 5,674.22 and the S&P 500 added 0.52 point to 2,293.08 Tuesday. DJIA futures were 19 points higher early Wednesday morning. Asian markets were mostly higher with Japan's Nikkei up 96.82 points (0.5%), Hong Kong's Hang Seng gained 153.56 points (0.7%), and China's Shanghai Composite rallied 13.89 points (0.4%). European markets were mixed Wednesday with London's FTSE 100 down 7.32 points (0.1%), Germany's DAX adding 14.21 points (0.1%), and France's CAC 40 gaining 27.53 points (0.6%). The U.S. dollar index was 0.180 higher at 100.580 while the euro lost another 0.0036 to 1.0648. March 30-year T-Bonds were 5/32 higher to 152'11 while April gold added $2.20 to $1,238.30. Crude oil dropped $0.37 to $51.80 while Brent crude fell $0.18 to $54.87. Dalian soybean futures showed small losses while Malaysian palm oil futures were 23 ringgits higher overnight.

	BULL		BEAR
1)	Corn continues to try to climb higher, usually after a slow start to the day.	1)	The nearby March-to-May corn spread continues to show strengthening carry, reflecting an increasingly bearish view of supply and demand.
2)	Export demand remains strong for U.S. soybeans, possibly leading to a lower ending stocks projection in Thursday's USDA reports.	2)	Wednesday morning weather forecasts continue to call for favorable soybean harvest conditions across most of Brazil.
3)	Early spring-like weather could keep buyers interested in new-crop Kansas City wheat.	3)	Continued strength of the U.S. dollar index could put pressure on wheat futures again.

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 had another quiet overnight session with old-crop March again moving in a 1 1/2-cent trading range, though volume picked up to 13,300 contracts through early Wednesday morning. The only thing unusual about that mix with the next round of USDA Supply and Demand reports looming Thursday was the uptick in volume. The contract's minor (short-term) trend on its daily chart remains sideways-to-up with resistance still at the previous high of $3.71. The problem corn faces, technically, is that both daily (short-term) and weekly (intermediate-term) stochastics (momentum study) are nearing the overbought level of 80% ahead of USDA's release, all while contracts continue to struggle to push through price resistance targets. This could possibly set the stage for a bearish surprise Thursday, an idea that also hinted at with the strengthening carry in the March-to-May futures spread. As for new-crop December, its average daily close in February so far (for initial insurance guaranteed price purposes) is roughly $3.94 1/4. Last year's came in at $3.86.

SOYBEANS Old-crop soybeans posted another solid rally overnight with the March contract moving through minor (short-term) resistance at $10.48 1/2. Its next short-term target is pegged at $10.59. While the rally off the low of $10.17 (February 1) has been impressive, it still looks to be nothing more than the second wave (Wave B) of a minor 3-wave downtrend. If so, then traders may be anticipating a more bearish round of February Supply and Demand numbers than would seem logical. For example: The continued strong pace of exports would certainly imply that USDA would need to increase its projected demand, continuing the seasonal decrease in domestic ending stocks. Also, USDA may not make as large an adjustment as expected to Brazil's production in its WASDE report. Yet, just as with corn, the nearby March-to-May futures spread remains in a downtrend (strengthening carry) reflecting an increasingly bearish view of short-term real supply and demand. Regarding new-crop November, its average daily close in February (for initial insurance guaranteed price purposes) so far is approximately $10.15 1/4. Last year's came in at $8.85.

WHEAT Winter wheat markets were quietly mixed early Wednesday with Chicago showing a small loss and Kansas City fractionally higher. While both remain in uptrends on weekly charts, they've struggled to maintain buying interest. Some of this has to do with this week's stronger U.S. dollar index, in addition to what is expected to be another bearish round of domestic and world supply and demand numbers in Thursday's reports. Traders will also keep an eye on the U.S. Southern Plains weather forecasts following the recent spate of spring-like temperatures. Wednesday morning forecasts are calling for another day with highs in the 60s and 70s.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.32	$0.05	-$0.37	Mar	-$0.002
Soybeans:	$9.67	$0.06	-$0.76	Mar	-$0.003
SRW Wheat:	$3.93	$0.08	-$0.38	Mar	$0.002
HRW Wheat:	$3.49	$0.05	-$0.91	Mar	$0.014
HRS Wheat:	$5.16	$0.01	-$0.39	May	-$0.007

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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