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 5 cents lower, and July Kansas City (HRW) wheat was fractionally higher.

CME Globex Recap:

As the U.S. Northeast gets slammed by a major winter storm, markets in general continued to churn as the Federal Reserve gets set to begin its two-day meeting that is expected to end with an announced increase in interest rates. Grains were lower as trends have all turned down, while energies recovered most of Monday's modest sell-off. Financial markets were mixed with gold and DJIA futures under pressure while the U.S. dollar index rallied.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 21.50 points (0.1%) lower at 20,881.48. The NASDAQ Composite added 14.06 points (0.2%) to 5,875.78 and the S&P 500 gained 0.87 point to 2,373.47 Monday. DJIA futures were 30 points lower early Tuesday morning. Asian markets were mixed with Japan's Nikkei down 24.25 points (0.1%), Hong Kong's Hang Seng losing 1.72 points, and China's Shanghai Composite adding 2.30 points (0.1%). European markets were mostly lower Tuesday with London's FTSE 100 up 12.02 points (0.2%), Germany's DAX off 4.34 points, and France's CAC 40 down 10.65 points (0.2%). The euro was 0.0011 lower at 1.0641 while the U.S. dollar index gained 0.22 to 101.59. June 30-year T-Bonds were 11/32 lower at 146'01 while April gold lost $0.50 to $1,202.60. Crude oil rallied $0.18 to $48.58 while Brent crude added $0.27 to $51.62. Dalian soybean futures were lower while Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	Both old-crop May and new-crop December corn contracts are testing last-chance short-term technical price support levels.	1)	The seasonal downtrend in corn futures continues to strengthen.
2)	Soybean markets (old-crop, cash, and new-crop) are all technically oversold.	2)	Strong commercial selling continues to be seen in soybeans.
3)	U.S. HRW wheat crop conditions could continue to be a concern.	3)	Prospects of a stronger U.S. dollar has wheat markets on the defensive.

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 Though corn's export demand remains solid, the futures market can't find any buyers. Old-crop May continued its slow grind toward short-term support on its daily chart at $3.58 1/4 overnight, sitting on its session low of $3.60 early Tuesday morning. This support level could be viewed as a last change price line marking the 76.4% retracement level of the previous uptrend from the low of $3.49 1/4 through the high of $3.87 1/4. Below that is the previous low and then the abyss. Similarly, new-crop December is also testing its 76.4% retracement level near $3.82 1/2, its low during the overnight session and where it was sitting early Tuesday. The previous low is down at $3.75 3/4. Both contracts are technically oversold with daily stochastics (short-term momentum study) below the 20% level. Will this be enough to generate new buying interest? The concern is the already large net-long futures position of noncommercial traders heading into the FOMC's two-day meeting. An expected interest rate hike could lead to continued liquidation by investment traders in commodities, including corn. Delivery of another 49 contracts was reported against the March issue, putting the total at 617 contracts.

SOYBEANS Old-crop May soybeans sank to a new low overnight, dipping below the previous mark of $10.01 1/4 to $9.98 3/4. While it remains in a solid short-term downtrend on its daily chart, stochastics (short-term momentum study) show the contract to be oversold. While this has done little to spark increased buying interest, it does keep the door open at least slightly for a potential short-term rally. Fundamentally, export demand continues to slow, seasonally, as more business turns to newly harvested South American supplies. Monday's weekly export inspections showed this trend is in place though total marketing year inspections are still running ahead of USDA's projected pace. However, another trend that continues is the downtrend (strengthening carry) of the May-to-July futures spread reflecting ongoing pressure from commercial traders. With this selling and that coming from the noncommercial side, it should be difficult to turn the soybean market around. Delivery of another 114 contracts against the March issue was reported, putting the total at 3,950 contracts.

WHEAT Winter wheat markets were mixed with Chicago (SRW) fractionally lower and Kansas City (HRW) fractionally higher. While there could be some concern over the condition of the U.S. winter wheat crop, particularly the HRW, futures traders have not been in a hurry to buy the market. In fact, new-crop July contracts for both Chicago and Kansas City have turned down on renewed pressure from noncommercial selling. Fundamentally, wheat in general continues to suffer from burdensome supplies as traders look ahead to the March 31 Quarterly Stocks report. This number will show wheat stocks on hand as of March 1, or through its third quarter of the marketing year. As for short-term trends, wheat traders could be nervous about the prospect of a stronger U.S. dollar following the Federal Reserve's expected interest rate increase Wednesday. If the dollar fails to rally though, it's possible wheat could see increased buying interest. Delivery of another 37 contracts against the Chicago March issue was reported, putting the total at 4,148 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:	$3.20	-$0.03	-$0.41	May	$0.006
Soybeans:	$9.27	$0.00	-$0.79	May	$0.007
SRW Wheat:	$3.86	-$0.09	-$0.44	May	$0.008
HRW Wheat:	$3.50	-$0.12	-$0.93	May	$0.006
HRS Wheat:	$4.89	-$0.07	-$0.42	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

(KA)

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