DTN Early Word Grains

Springing Forward, Only to Fall Back

6:00 a.m. CME Globex:

May corn was 1 cent lower, May soybeans were unchanged, and July Kansas City (HRW) wheat was 5 cents lower.

CME Globex Recap:

After an initial attempt to follow soybeans and soybean meal higher, corn wheat fell back below unchanged overnight into Monday morning. Outside markets were mixed with energies mostly lower and metals higher. The U.S. dollar index was under pressure as traders wait for the start of the Federal Reserve's two-day meeting Tuesday, a meeting that is expected to result in an interest rate increase. DJIA futures were also posting a small loss.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 44.79 points (0.2%) higher at 20,902.98. The NASDAQ Composite added 22.92 points (0.4%) to 5,861.73 and the S&P 500 gained 7.73 points (0.3%) to 2,372.60 Friday. DJIA futures were 2 points lower early Monday morning. Asian markets were higher with Japan's Nikkei up 29.14 points (0.2%), Hong Kong's Hang Seng gaining 261.00 points (1.1%), and China's Shanghai Composite rallied 24.26 points (0.8%). European markets were also higher Monday with London's FTSE 100 up 8.39 points (0.1%), Germany's DAX gaining 11.25 points (0.1%), and France's CAC 40 up 1.66 points. The euro was 0.0006 lower at 1.0667 while the U.S. dollar index lost 0.05 to 101.33. June 30-year T-Bonds were 10/32 higher at 147'05 while April gold gained $6.00 to $1,207.40. Crude oil fell $0.39 to $48.10 while Brent crude dropped $0.33 to $51.04. Dalian soybean and Malaysian palm oil futures were both lower overnight.

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BULL BEAR
1) Technically, both old-crop and new-crop corn futures are nearing short-term lows. 1) Corn markets posted bearish technical signals last week (for more information, see weekend Technically Speaking blog).
2) Soybean markets are showing oversold situations. 2) Strong commercial selling continues to be seen in soybeans.
3) Weather conditions across the U.S. Southern Plains remain challenging for the HRW wheat crop. 3) Demand for U.S. wheat continues to run behind USDA's projected pace.

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 Follow-through selling from Friday's bearish close had corn on the defensive again overnight into Monday morning. This has old-crop May testing short-term support on its daily chart near $3.62 as daily stochastics fall below the oversold level of 20%. Below that support is pegged at $3.58 1/4. Fundamentally the song remains the same: Demand. Traders will keep an eye on Monday's weekly export inspection number for signs that export demand remains strong. National average basis firmed slightly last week, due in large part to the sell-off in futures, with Friday's DTN National Corn Index (national average cash price) coming in at $3.22 3/4. This put it 41 1/2 cents under the close of the May contract, as compared to the previous Friday's 42 1/4 cents under. Delivery of another 49 contracts was reported against the March issue, putting the total at 568 contracts.

SOYBEANS Soybean contracts were showing small gains early Monday, gaining back a fraction of what was lost during last week's sell-off. With the old-crop May near support at $10.01 1/4, and daily stochastics well below the oversold level of 20%, the contract could be nearing a minor (short-term) bullish turn. However, old-crop soybeans have been fighting against continued commercial selling as indicated by the strengthening carry in the May-to-July futures spread. Last week saw national average basis firm slightly with Friday's DTN National Soybean Index calculated at $9.26 3/4, 79 3/4 cents under the close of the May contract. The previous Friday saw basis at 80 3/4 cents under. The 1-cent gain did little to offset the 31-cent sell-off in May futures over the course of the week. Concern is that export demand continues to see a seasonal slowdown, with next evidence being Monday morning's weekly Export Inspection report. Delivery of another 193 contracts against the March issue was reported, putting the total at 3,836 contracts.

WHEAT Winter wheat contracts were showing losses early Monday morning, failing to gain ground despite a lower U.S. dollar index. One of the concerns is that this week's expected interest rate increase will ultimately spark another rally in the dollar, while currencies for key export competitors remain weak. This continues to cast a shadow of doubt over USDA's export projection of 1.025 bb. Traders will also keep an eye on weather forecasts, with much of the winter wheat crop out of dormancy as an wave of cold temperatures washes across both the U.S. Southern Plains (HRW) and Midwest (SRW). Delivery of another 12 contracts against the Chicago March issue was reported, putting the total at 4,111 contracts. Kansas City March had 0 contracts delivered, leaving its total at 432 contracts.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.23 -$0.03 -$0.41 May -$0.001
Soybeans: $9.27 -$0.05 -$0.80 May -$0.003
SRW Wheat: $3.95 -$0.03 -$0.45 May $0.002
HRW Wheat: $3.62 -$0.07 -$0.94 May $0.001
HRS Wheat: $4.96 $0.00 -$0.43 May $0.001

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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