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 5 cents lower, and July Kansas City wheat was 2 cents lower.

CME Globex Recap:

Grains took a breather overnight. Led by the Chicago soybean complex. Outside markets were mostly higher as energies continued Wednesday's rally and gold's long-term uptrend continues to strengthen. This despite light strength in the U.S. dollar index. DJIA futures were also higher, following the lead of most overseas equities.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 35.95 points (0.2%) lower at 20,054.34. The NASDAQ Composite gained 8.24 points (0.2%) to 5,682.45 and the S&P 500 added 1.59 point to 2,294.67 Wednesday. DJIA futures were 18 points higher early Thursday morning. Asian markets were mixed with Japan's Nikkei down 99.93 points (0.5%), Hong Kong's Hang Seng gained 40.01 points (0.2%), and China's Shanghai Composite added 16.20 points (0.5%). European markets were mostly higher Thursday with London's FTSE 100 up 7.59 points (0.1%), Germany's DAX adding 40.31 points (0.4%), and France's CAC 40 gaining 24.36 points (0.5%). The U.S. dollar index was 0.14 higher at 100.31 while the euro lost another 0.0016 to 1.0683. March 30-year T-Bonds were 20/32 lower to 152'21 while April gold added $2.30 to $1,241.80. Crude oil gained $0.46 to $52.80 while Brent crude rallied $0.51 to $55.63. Dalian soybean futures were lower while Malaysian palm oil futures were closed overnight.

	BULL		BEAR
1)	U.S. corn ending stocks are expected to decrease, possibly due to the continued strength of export demand.	1)	Technically, corn continues to struggle pushing through overhead resistance.
2)	USDA is expected to continue its seasonal decrease of domestic soybean ending stocks estimates.	2)	Price charts show both soybean and soybean futures are in downtrends.
3)	The February U.S. wheat ending stocks estimate could come in fractionally lower than what was seen in January.	3)	A bearish U.S. wheat ending stocks number would not be a surprise.

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 market bulls might be a bit nervous heading into Thursday's weekly Export Sales and Shipment (WESS) and monthly Supply and Demand reports, if looking at price charts. Old-crop corn is testing its previous high of $3.71 while daily stochastics sit above the overbought level of 80%. Weekly stochastics have also climbed above 80% with the contract sitting just below resistance at $3.74. However, from a fundamental point of view, those same market bulls might actually be looking forward to USDA's monthly numbers. First, Thursday morning's WESS is expected to show export demand continues to run well ahead of USDA's January projection of a 17% marketing year-to-marketing year gain. As discussed in DTN's report preview, "Demand Change", the strength of export demand alone should be enough for USDA to decrease projected ending stocks for 2016-2017, possibly below the inconsequential adjustment shown in the average pre-report estimate of 2.342 billion bushels. Traders will also keep a close eye on South American corn production projections in February's WASDE, with average pre-report estimates again showing only small adjustments. As for new-crop December, its average daily close in February so far (for initial insurance guaranteed price purposes) is roughly $3.95. Last year's came in at $3.86.

SOYBEANS Those same market bulls nervous over corn's charts may be biting their nails regarding soybeans. Old-crop March has posted an impressive rally since posting a low of $10.17 February 1, racing to a test of minor (short-term) technical resistance at $10.59. Wednesday's high was $10.49 3/4. Meanwhile, the contract's daily chart shows it to still be in a minor downtrend with this rally looking like nothing more than the second wave of a 3-wave move. If so, it would imply a sharp post-USDA report sell-off expected to move below the previous low. To that throw in a solid downtrend (strengthening carry) in the March-to-May futures spread that reflects an increasingly bearish short-term commercial outlook. The combination of the two could have market bulls popping antacids like they were chocolate coated candies ahead of USDA's February Supply and Demand reports. However, these same reports are expected to be bullish with the key numbers being slight decreases in both domestic and world ending stocks estimates. Regarding new-crop November, its average daily close in February (for initial insurance guaranteed price purposes) so far is approximately $10.17 1/2. Last year's came in at $8.85.

WHEAT Winter wheat markets were lower again Thursday morning as both Chicago and Kansas City hit 'pause' ahead of USDA's February Supply and Demand reports. While the numbers aren't expected to do much for the wheat complex as a whole, Chicago wheat could be influenced by spillover action from corn and soybeans. Fundamentally the song remains the same, though a slight 8 mb decrease is expected to be seen in domestic ending stocks. On the other hand, world ending stocks are expected to increase slightly. Once USDA's latest has passed through the system, traders could turn their attention back to recent above-normal temperatures across the U.S. Southern Plains while scanning forecasts for another winter cold snap.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.34	$0.02	-$0.37	Mar	-$0.002
Soybeans:	$9.83	$0.16	-$0.76	Mar	$0.000
SRW Wheat:	$3.95	$0.02	-$0.38	Mar	$0.002
HRW Wheat:	$3.51	$0.02	-$0.91	Mar	-$0.001
HRS Wheat:	$5.19	$0.02	-$0.39	May	$0.002

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

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

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