DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

May corn was 2 cents higher, May soybeans were 6 cents higher, and July Kansas City (HRW) wheat was 6 cents higher.

CME Globex Recap:

Commodities were mostly higher overnight, recovering from the sell-off by the complex early in the week. Some of the support was tied to a lower U.S. dollar index as it pulls back from Tuesday's high, and a rally in DJIA futures. Still, traders may be cautious as Wednesday progresses ahead of Chairwoman Yellen's expected announcement of an interest rate increase.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 44.11 points (0.2%) lower at 20,837.37. The NASDAQ Composite dropped 18.97 points (0.3%) to 5,856.82 and the S&P 500 lost 8.02 points (0.3%) to 2,365.45 Tuesday. DJIA futures were 29 points higher early Wednesday morning. Asian markets were mostly lower with Japan's Nikkei down 32.12 points (0.1%), Hong Kong's Hang Seng off 35.10 points (0.1%), and China's Shanghai Composite up 2.43 points (0.1%). European markets were mostly higher Wednesday with London's FTSE 100 gaining 20.66 points (0.3%), Germany's DAX adding 11.71 points (0.1%), and France's CAC 40 rallying 5.93 points (0.1%). The euro was 0.0021 higher at 1.0625 while the U.S. dollar index dipped 0.12 to 101.58. June 30-year T-Bonds were 5/32 higher at 147'00 while April gold lost $1.50 to $1,201.10. Crude oil rallied $0.84 to $48.56 while Brent crude added $0.76 to $51.65. Dalian soybean futures were lower while Malaysian palm oil futures were higher again overnight.

	BULL		BEAR
1)	Continued strong demand for corn continues to provide support.	1)	The seasonal trend in corn remains down.
2)	Old-crop soybeans look to be nearing the end of a short-term downtrend on daily charts.	2)	Strong commercial selling continues to be seen in soybeans.
3)	Sub-freezing temperatures through early Wednesday morning could be a concern for U.S. winter wheat crops.	3)	Prospects of a stronger U.S. dollar could limit buying interest 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 Tuesday's rally carried over into the overnight session and early Wednesday morning, with old-crop May moving closer to confirming a change to an uptrend on its short-term daily chart. The contract's sell-off looks to have stalled with its test of support between $3.62 and $3.58 1/4, putting daily stochastics (short-term momentum study) in position to establish a bullish signal. Some of the buying interest could come from commercial traders, with the carry in the May-to-July futures spread being trimmed back. This could be in response to the recent downtrend shutting off cash sales while demand remains solid for old-crop corn. A similar situation seems to be brewing in new-crop December as the contract rallies off its test of support near $3.82 1/4. Early Wednesday could see buying interest, albeit light, hold while late day action could depend on outside market's reactions to an expected interest rate increase by the Federal Reserve.

SOYBEANS At first glance the daily chart for old-crop May corn looks ugly given Tuesday's close below its previous low of $10.01 1/4. However, as with corn, Wednesday's rally has daily stochastics (short-term momentum study) nearing a bullish signal that if completed would suggest the minor downtrend has come to an end and at the least turned sideways. The main difference between corn and soybeans is that the latter is not seeing continued commercial buying. In fact, it is pressure by the opposite as export demand dries up (seasonally) allowing futures spreads to remain in a downtrend (strengthening carry). Fundamentally, Brazil's harvest has supposedly moved well past the 50% completed mark with some of those new supplies beginning to reach port. Soybeans remain vulnerable to continued noncommercial selling, particularly if Wednesday sees the Federal Reserve raise interest rates as expected.

WHEAT Winter wheat markets were higher early Wednesday, with some of the support possibly tied to concern regarding cold temperatures across much of the U.S. Southern Plains overnight. Sub-freezing temperatures extended down into the Texas Panhandle through early Wednesday morning. The Kansas City July contract was showing a solid gain, though buying interest could be tested if the U.S. dollar index rallies late in the day following a possible interest rate increase by the Federal Reserve. New-crop Chicago is seeing similar support, with weaker carry in the futures spreads reflecting at least some interest from commercial buyers.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.21	$0.01	-$0.41	May	$0.000
Soybeans:	$9.21	-$0.06	-$0.79	May	$0.003
SRW Wheat:	$3.86	$0.00	-$0.45	May	-$0.004
HRW Wheat:	$3.49	$0.00	-$0.93	May	-$0.002
HRS Wheat:	$4.90	$0.01	-$0.43	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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