DTN Early Word Grains
The End is Near
May corn was fractionally higher, May soybeans were 1 cent lower, and July Kansas City (HRW) wheat was 2 cents lower.
CME Globex Recap:The end of the month is fast approaching with the U.S. dollar index nearing the establishment of a bearish range on its monthly chart. Yes, the greenback was on the defensive again overnight into Monday morning, though commodities in general didn't look to capitalize. Corn was showing a small gain while gold jumped almost $10. Otherwise, the sector was mixed at best.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 59.86 points (0.3%) lower at 20,596.72. The NASDAQ Composite gained 11.04 points (0.2%) to 5,828.74 and the S&P 500 dipped 1.98 points (0.1%) to 2,343.98 Friday. DJIA futures were 141 points lower early Monday morning. Asian markets were lower with Japan's Nikkei down 276.94 points (1.4%), Hong Kong's Hang Seng lost 164.57 points (0.7%), and China's Shanghai Composite fell 2.49 points (0.1%). European markets were also lower Monday with London's FTSE 100 losing 55.18 points (0.8%), Germany's DAX off 99.67 points (0.8%), and France's CAC 40 down 18.30 points (0.4%). The euro was 0.0070 higher at 1.0869 while the U.S. dollar index lost 0.73 to 99.04, a new 3-month low. June 30-year T-Bonds were 17/32 higher at 151'20 while April gold gained $8.70 to $1,257.20. Crude oil fell $0.44 to $47.53 while Brent crude lost $0.32 to $50.48. Dalian soybean and Malaysian palm oil futures were sharply lower overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | Both old and new-crop corn remain short-term oversold on daily charts. | 1) | Noncommercial selling could continue to pressure the corn market. |
| 2) | Old-crop May soybeans are testing key technical support on its weekly chart. | 2) | Last Friday's CFTC Commitments of Traders report showed noncommercial interests continue to hold a sizeable net-long futures position in soybeans. |
| 3) | The U.S. Southern Plains HRW wheat growing area remains relatively dry. | 3) | The U.S. Midwest SRW wheat growing area continues to see rains move across. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN While corn remains in a strong downtrend on weekly charts, daily charts for both old-crop May and new-crop December offer a glimmer of hope that minor (short-term) trends could soon turn up. However, pressure from continued noncommercial long-liquidation could be seen again this week, at least through the early part. Late activity will be focused on Friday's USDA Quarterly Stocks (old-crop) and Prospective Plantings (new-crop) reports. While neither set of numbers is expected to change trends on long-term monthly or intermediate-term weekly charts, changes could be seen on the short-term dailies. Until then, from a fundamental point of view, traders will continue to focus on export demand (old-crop, both Monday's weekly export inspections and Thursday's weekly sales and shipments) and weather (new-crop again). Last Friday saw the DTN National Corn Index calculated at $3.17 1/4, putting national average basis 39 cents under the close of the May futures contract. The previous week saw basis at 40 1/2 cents. However, much of the strength in basis was likely due to the sharp sell-off in the futures market rather than a strong increase in demand.
SOYBEANS The most bullish technical factor for old-crop soybeans could be that the May contract is testing support near $9.73 on its weekly chart again Monday morning, a price that marks the 76.4% retracement level of its previous uptrend from $9.37 1/4 through the high of $10.88 1/4. The bad news is if this price fails to hold the contract could look at falling all the way back to its previous low. The good news is weekly stochastics (intermediate-term momentum study) show the market to be in an oversold situation, though the corresponding bad news is that noncommercial traders reportedly continued to hold a net-long futures position of 70,957 contracts (as of Tuesday, March 21) meaning further liquidation pressure is possible. Fundamentally the 10 1/2 cent carry of the May-to-July futures spread covers a bearish 67% of full commercial carry. On the other hand, last week's sharp sell-off in the futures market helped national average basis strengthen by roughly 1 1/4 cents to 77 cents under (DTN National Soybean Index minus the May futures contract).
WHEAT Despite being sharply on daily charts and the U.S. dollar index posting a sharp sell-off, winter wheat contracts were under pressure again overnight. It seems traders are focused on weather, with the U.S. Midwest continuing to see rains while the U.S. Southern Plains are relatively dry. Eventually this could provide support to the Kansas City (HRW) wheat market, just not first thing this Monday morning. Traders will keep an eye on weekly export inspections, though all wheat business is expected to still be running behind USDA's projected pace through Thursday, March 23.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.17 | $0.00 | -$0.39 | May | $0.002 |
| Soybeans: | $8.99 | -$0.16 | -$0.77 | May | -$0.003 |
| SRW Wheat: | $3.82 | $0.03 | -$0.43 | May | -$0.008 |
| HRW Wheat: | $3.37 | $0.00 | -$0.91 | May | $0.003 |
| HRS Wheat: | $4.95 | -$0.05 | -$0.41 | 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
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