DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

May corn was 1 cent lower, May soybeans were 1 cent lower, and July Kansas City (HRW) wheat was 2 cents lower.

CME Globex Recap:

Grain markets were lower again overnight with contracts sitting at or near session lows early Wednesday morning. Outside markets were mostly lower as well, with crude oil and gold both showing losses while the soft complex was mixed. Of the latter, cotton continues to come under pressure. Both the U.S. dollar index and DJIA futures were showing small gains as traders continue to wait for Friday's February jobs data. Next week brings the expected announcement of an interest rate hike by the Federal Reserve.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 29.58 points (0.1%) lower at 20,924.58. The NASDAQ Composite lost 15.25 points (0.3%) to 5,833.93 and the S&P 500 fell 6.92 points (0.3%) to 2,368.39 Tuesday. DJIA futures were 4 points higher early Wednesday morning. Asian markets were mostly lower with Japan's Nikkei down 90.12 points (0.5%), Hong Kong's Hang Seng gained 101.20 points (0.4%), and China's Shanghai Composite lost 1.74 points. European markets were mixed Wednesday with London's FTSE 100 down 1.42 points, Germany's DAX gaining 35.42 points (0.3%), and France's CAC 40 off 4.41 points (0.1%). The euro was 0.0008 lower at 1.0560 while the U.S. dollar index gained 0.11 to 101.93. June 30-year T-Bonds were 19/32 lower at 148'08 while April gold lost $2.70 to $1,213.40. Crude oil fell $0.42 to $52.72 while Brent crude slipped $0.35 to $55.57. Dalian soybean futures were mixed while Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	Demand remains solid for U.S. corn.	1)	Noncommercial selling continues to dominate the corn market.
2)	Technically, May soybeans should start to find renewed buying interest if its short-term 5-wave uptrend is to hold together.	2)	Commercial selling continues to push soybeans lower.
3)	Weather conditions across the U.S. Southern Plains remain challenging for the HRW wheat crop.	3)	The strength of the U.S. dollar index has cooled potential 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 This week's bearish activity has changed the look of May corn's short-term daily chart, with indications now that the contract not only wants to test its previous low of $3.67 1/4 (February 27) but possibly fall to next support at $3.62. This price marks the 67% retracement level of the previous uptrend from $3.49 1/4 through the high of $3.87 1/4, and would complete the contract's 3-wave short-term downtrend. A similar sell-off could be seen in new-crop December, with initial support at the previous low of $3.89 1/2 expected to fail leading to a test of next support at $3.85. This too should complete the contract's short-term downtrend. Fundamentally there isn't much news to provide support. Demand remains solid while old-crop and new-crop futures spreads are stable at neutral levels of full commercial carry. Traders are presumably waiting for Thursday's round of monthly supply and demand data from USDA, though quarterly stocks at the end of the month should carry much more weight. Delivery of another 49 contracts against the March issue was reported, putting the total at 509 contracts.

SOYBEANSSoybean markets (both old-crop and new-crop were under light pressure again overnight, with the biggest concern in old-crop being continued commercial selling. The downtrend of the May-to-July futures spread continues to strengthen, creeping closer to covering a bearish level of full commercial carry. Technically old-crop May should be nearing a short-term low if it wants to hold its 5-wave uptrend together. Support is at the low of the previous downtrend of $10.17 (February 27). Fundamentally pressure could continue to come from harvest reports out of South America ahead of USDA's next guess on crop size included in Thursday's World Agricultural Supply and Demand Estimates (WASDE). As for new-crop November, it remains in a short-term 3-wave downtrend with a target price near $9.93 3/4. Delivery of another 238 contracts against the March issue was reported, putting the total at 3,131 contracts.

WHEAT Winter wheat contracts were showing small losses early Wednesday morning, with new-crop Kansas City and Chicago both pressured by renewed commercial selling. Despite this week's activity, new-crop July contracts remain in uptrends, though butting heads against resistance technical resistance on secondary (intermediate-term) weekly charts. Kansas City (HRW) July has been unable to break through the $4.96 3/4 mark as momentum indicators show it to be nearing an overbought situation. Similarly, Chicago (SRW) July has had trouble with technical resistance at $4.75 1/2 on its weekly chart. Either or both could get a jolt of renewed buying interest if early crop conditions start to deteriorate. However, those are generally viewed as an unreliable read on how the crop may actually produce, leaving the door open to increased selling if the U.S. dollar index finds a next gear in its rally. Delivery of another 229 contracts against the Chicago March issue was reported, putting the total at 3,941 contracts. Kansas City March had another 134 contracts delivered, putting its total at 430 contracts.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.35	-$0.02	-$0.41	May	$0.004
Soybeans:	$9.45	-$0.12	-$0.80	May	$0.001
SRW Wheat:	$4.11	-$0.01	-$0.45	May	$0.014
HRW Wheat:	$3.77	-$0.02	-$0.96	May	-$0.003
HRS Wheat:	$4.96	-$0.04	-$0.43	May	-$0.009

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

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

(KA)

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