DTN Early Word Grains

Green Grains Again

6:00 a.m. CME Globex:

March corn was 1 cent higher, March soybeans were 3 cents higher, and July Kansas City wheat was 1 cent higher.

CME Globex Recap:

Grains and energies changed places from the night before with the former higher early Wednesday while the latter was mostly lower. Only metals followed a similar path to the previous overnight session, with contracts lower once again. The U.S. dollar index continues to show renewed buying interest, with the release of the latest FOMC minutes set for Wednesday afternoon, while DJIA futures were lower overnight.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 118.95 points (0.6%) higher at 20,743.00. The NASDAQ Composite gained 27.37 points (0.5%) to 5,865.95 and the S&P 500 added 14.22 points (0.6%) to 2,365.38 Tuesday. DJIA futures were unchanged early Wednesday morning. Asian markets were mostly higher with Japan's Nikkei off 1.57 points, Hong Kong's Hang Seng gained 238.33 points (1.0%), and China's Shanghai Composite added 7.89 points (0.2%). European markets were mostly lower Wednesday though London's FTSE 100 was up 3.25 points, Germany's DAX gaining 12.07 points (0.1%), while France's CAC 40 added 0.45 point. The euro was down again, losing another 0.0031 to 1.0506 while the U.S. dollar index added 0.17 to 101.61. March 30-year T-Bonds were 10/32 higher at 151'20 while April gold dipped $1.00 to $1,237.90. Crude oil fell $0.28 to $54.05 while Brent crude lost $0.28 to $56.38. Dalian soybean futures were lower while Malaysian palm oil futures were mostly higher overnight.

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BULL BEAR
1) U.S. corn continues to see solid export demand. 1) The recent round of noncommercial buying in corn could lead to short-term liquidation.
2) Total export inspections of soybeans continue to run ahead of USDA's projected pace. 2) Commercial pressure continues to build in soybeans, a reflection of a seasonal slowdown in exports and harvest progress in South America.
3) A return to more seasonal weather could support new-crop winter wheat contracts. 3) The continued strength of the U.S. dollar index could put a damper on buying enthusiasm in wheat.

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 The corn market continues to see bullish fundamental news, with Tuesday bringing with it another solid weekly export inspection figure of 45.4 mb and announcements of new export sales. Contracts were able to fight off early pressure and spillover selling from the other grains to close higher. This led to continued buying overnight, as old-crop May extended its minor (short-term) rally off initial technical support at $3.74 1/2. The contract is showing signs of having established a minor downtrend on its daily charts late last week, with this support price the 33% retracement level of the previous short-term uptrend from $3.49 1/4 through last Thursday's high of $3.87 1/4. Given a normal 3-wave downtrend and the May-to-July futures spread showing a neutral level of full commercial carry, May corn could ultimately slide to the 50% retracement level of $3.68 1/4 before resuming its secondary (intermediate-term) seasonal uptrend. 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 Similar to Tuesday morning, soybeans are starting Wednesday off by showing a modest rally in both old-crop and new-crop. Old-crop March and May bumped up about 3 cents overnight, erasing roughly half of what was lost during Tuesday's sell-off. Pressure from commercial selling continues to be seen as weekly export inspections showed a seasonal slowdown and South American harvest progresses under mostly favorable weather. Technically the May contract hasn't done much for quite some time, staying within its range between support at its 4-week low of $10.37 1/4 and resistance at $10.37 3/4. The latter marks the 76.4% retracement level of the previous secondary (intermediate-term) downtrend on its weekly chart from $11.16 through the low of $9.37 1/4. 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 Winter wheat contracts were showing small gains early Wednesday morning, erasing a small part of Tuesday's sell-off. The biggest fundamental factor continues to be forecasts for a return to more seasonal temperatures across the U.S. Southern Plains (HRW) and Midwest (SRW) growing areas to close out the month of February. This could be a concern given the recent extended period of much above normal temperatures that has coaxed crops out of dormancy. Also, the latest forecasts continue to call for dry weather over much of the Southern Plains, an area that will be needing moisture if the HRW crop survives, and it likely will, the expected round of cold temperatures. Tuesdays' weekly export inspections (for the week ending Thursday, February 16) could be viewed as disappointing given USDA's increased export demand projection in its February round of reports. Total wheat inspections remain on pace with USDA's previous projection of 975 mb.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.33 $0.01 -$0.37 Mar $0.001
Soybeans: $9.53 -$0.06 -$0.73 Mar $0.004
SRW Wheat: $4.01 -$0.04 -$0.35 Mar $0.007
HRW Wheat: $3.61 -$0.04 -$0.91 Mar -$0.002
HRS Wheat: $5.07 -$0.05 -$0.42 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

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