DTN Early Word Grains
Mixed Markets to Start the Week
March corn was 1 cent higher, March soybeans were 4 cents higher, and July Kansas City wheat was 2 cents lower.
CME Globex Recap:Soybeans were showing green early Tuesday morning, starting the week by erasing some of last Friday's sharp sell-off. Corn also rallied overnight, holding fractional gains through early Tuesday, while wheat contracts were lower. Outside commodities were mostly higher though soybean oil and gold stayed under pressure. The U.S. dollar index and DJIA futures both posted solid gains.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 4.28 points higher at 20,624.05. The NASDAQ Composite gained 23.68 points (0.4%) to 5,838.58 and the S&P 500 added 3.94 points (0.2%) to 2,351.16 Friday. DJIA futures were 59 points higher early Tuesday morning. Asian markets were mostly higher with Japan's Nikkei up 130.36 points (0.7%), Hong Kong's Hang Seng lost 182.45 points (0.8%), and China's Shanghai Composite added 13.36 points (0.4%). European markets were also mostly higher Tuesday with London's FTSE 100 off 13.78 points (0.2%), Germany's DAX gaining 51.16 points (0.4%), and France's CAC 40 up 3.25 points. The euro was down 0.0076 at 1.0538 while the U.S. dollar index added 0.62 to 101.52. March 30-year T-Bonds were 18/32 lower at 150'22 while April gold fell $9.60 to $1,229.50. Crude oil rallied $1.05 to $54.45 while Brent crude gained $1.10 to $57.28. Dalian soybean futures were higher while March Malaysian palm oil futures lost 49 ringgits overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | Weekly export inspections could come in bullish for corn Tuesday morning | 1) | The recent round of noncommercial buying in corn could lead to short-term liquidation. |
| 2) | Weekly export inspections are also expected to be bullish for soybeans. | 2) | Soybean basis and futures spreads remained bearish last week, possibly indicating the seasonal slowdown in export demand is at hand. |
| 3) | A return to more seasonal weather could support new-crop winter wheat contracts. | 3) | Weekly export inspections of wheat could be disappointing given USDA's increased demand projection. |
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 COMMENTSCORN Corn came out of the three-day harvest (South American) holiday weekend quietly, with contracts posting 2 1/2 cent trading ranges through early Tuesday morning. In the old-crop market, May has taken the top step (most open interest) as March nears delivery at the fast approaching end of the month. May corn established a minor (short-term) downtrend on its daily chart last week putting initial support at $3.74 1/2. Both Friday and the overnight session saw the contract test this support with lows of $3.75 1/4. When (not if) that support breaks, next short-term targets are $3.68 1/4 and $3.62. Last Friday's CFTC Commitments of Traders report showed the noncommercial net-futures position grew to 170,416 contracts, the largest since the week of July 5, 2016. The commercial outlook remains neutral, with both old-crop and new-crop forward curves holding steady last week. National average basis firmed slightly, with Friday's DTN National Corn Index calculated at $3.31 3/4, 36 1/2 cents under the close of the March futures contract. The previous Friday saw national average basis of 37 cents under. New-crop December also established a minor downtrend on its daily chart last week while its average daily close in February so far (for initial insurance guaranteed price purposes) is roughly $3.97. Last year's came in at $3.86.
SOYBEANS A modest rally in soybeans coming out of a three-day harvest (South American) weekend shouldn't surprise anyone. After all the market was clobbered late last week with old-crop March (and May) losing nearly 30 cents from Wednesday's high. Much of the pressure came from commercial selling as both March-to-May and May-to-July futures spreads continue to see their downtrends (stronger carry) strengthen. March-to-May is covering a bearish (73%) level of full commercial carry while May-to-July remains neutral-to-bearish (54%) early Tuesday morning. National average basis did firm to 73 3/4 cents under (DTN National Soybean Index minus the close of March futures) from the previous Friday's 75 3/4 cents under, though offsetting only a small part of the futures market sell-off. Traders will keep a close eye on weekly export numbers, Tuesday's inspections and Friday's sales and shipments, for signs that export demand is starting to slow. Regarding new-crop November, its average daily close in February (for initial insurance guaranteed price purposes) so far is approximately $10.22. Last year's came in at $8.85.
WHEAT After testing technical resistance last week, both new-crop July Kansas City (HRW) and Chicago (SRW) contracts remain under pressure early Tuesday morning. The biggest news in the market remains weather following the recent extended run of late spring/early summer like temperatures across the U.S. Southern Plains (HRW) and U.S. Midwest (SRW). Extended forecasts are now looking for a return to more seasonal weather at the end of this week, though new-crop futures are showing little reaction coming out of the three-day holiday weekend. It would not be surprising to see both stay under pressure, even if forecasts start calling for sub-freezing temperatures, as traders have learned to take a wait-and-see approach to winter wheat's early demise. Additional pressure could come from the stronger U.S. dollar index as the week gets under way.
| 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: | $9.59 | -$0.11 | -$0.74 | Mar | $0.004 |
| SRW Wheat: | $4.05 | -$0.05 | -$0.36 | Mar | $0.013 |
| HRW Wheat: | $3.66 | -$0.02 | -$0.91 | Mar | $0.000 |
| HRS Wheat: | $5.12 | -$0.02 | -$0.43 | May | -$0.008 |
Darin Newsom can be reached at darin.newsom@dtn.com
Darin can be followed throughout the day at www.twitter.com\DarinNewsom
(BAS)
Copyright 2017 DTN/The Progressive Farmer. All rights reserved.