DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

Grains were closed overnight for Tuesday's holiday, scheduled to open at 8:30 am (CT) Wednesday.

CME Globex Recap:

As the smoke from the previous night's fireworks begins to clear, headlines regarding a threat of war with North Korea become visible. Early Wednesday finds markets not paying that much attention to the new threats with the U.S. dollar index showing a small rally and gold under pressure once again. Crude oil as fallen; the minor (short-term) uptrend that has created so much hubbub nearing its end.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 129.64 points (0.6%) higher at 21,479.27, the NASDAQ Composite lost 30.36 points (0.5%) to 6,110.06, and the S&P 500 rallied 5.60 points (0.2%) to 2,429.01 Monday. DJIA futures were 1 point lower early Wednesday morning. Asian markets closed mostly higher with Japan's Nikkei up 49.28 points (0.3%), Hong Kong's Hang Seng gaining 132.96 points (0.5%), and China's Shanghai Composite up 24.33 points (0.8%). European markets were trading mixed with London's FTSE 100 down 6.60 points (0.1%), Germany's DAX up 6.02 points, and France's CAC 40 rallying 5.20 points (0.1%). The euro was 0.0030 lower at 1.1317 while the U.S. dollar index gained 0.22 to 96.47. September 30-year T-Bonds were 2/32 lower at 153'00 while August gold lost another $1.20 to $1,218.00. Crude oil was $0.70 lower at $46.37 while Brent crude lost $0.67 to $48.94. China's Dalian soybean futures were lower while Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	With weather unchanged from Monday, corn could find renewed buying interest Wednesday.	1)	Monday's close could be viewed as slightly bearish for corn.
2)	Soybeans remain bullish on daily, weekly, and monthly charts.	2)	The continued rally of the U.S. dollar this month could start to dull some of the buying interest in soybeans.
3)	A lack of rain in the Northern Plains could drive the wheat complex higher again Wednesday.	3)	Winter wheat futures spreads continue to reflect a bearish commercial outlook.

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 Grain futures open Wednesday morning at 8:30 (CT). The last we saw of new-crop December corn was it leaving gaps and taking names this past Monday. However, December corn closed well off its high of $4.07 at $3.99 1/4, possibly giving market bulls at least slight pause over the course of Tuesday's U.S. holiday. If weather remains the driving force behind corn's rally, and it most likely is, then Wednesday's session should see renewed buying interest emerge. A look at the precipitation map over the last 24 hours shows only spotty coverage of light rain for much of the U.S. Midwest, and next to nothing for the Northern Plains. And while outside markets aren't favoring a continued rally in commodities, it would seem a stretch of even the most bearish imagination to picture a scenario with December corn establishing an island-top formation on its daily chart by leaving a bearish gap below Monday's low of $3.94 1/4. Delivery of 1,302 contracts was reported against the July issue, putting the total at 5,182 contracts.

SOYBEANS Similar to December corn, new-crop November soybeans left a price gap on its daily chart Monday between $9.58 and $9.63. Unlike its kingly compadre, though, November soybeans stayed within the high end of its daily trading range through Monday's close. This makes a bearish reaction to the bullish action even less likely when Wednesday's session gets under way at 8:30 am (CT). From a technical point of view, if Nov beans can clear resistance at $9.01 on its weekly chart the next upside target is sitting near $10.10. Fundamentally, traders are likely to have a running abacus of old-crop exports, each showing a slightly different opinion of whether or not USDA is once again underestimating marketing year demand. Delivery of 1,048 contracts was reported against the July issue, putting the total at 3,158 contracts.

WHEAT Wheat farmers in the Northern Plains have changed the lyrics of the classic song "It Never Rains in Southern California" to "It Never Rains in South Dakota", or North Dakota, or Montana, Wyoming, etc. With the past 24-hour precipitation largely blank again Wednesday morning, it would not come as a surprise to see Minneapolis spring wheat futures continue its runaway rally once grains open at 8:30 (CT). Having cleared major (long-term) technical resistance near $8.00 on the market's monthly charts, its sights are likely fixed on the next target of $9.07. Futures spreads remain strong and basis firm, continuing to indicate a market bubble is not yet firming. And if spring wheat continues to rally, then winter wheat markets of Chicago and Kansas City are likely to follow at a distance. Delivery of 217 contracts was reported against the July Chicago, putting its total at 531 contracts. Another 455 contracts were reported delivered against the July Kansas City issue increasing its total to 1,248 contracts.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.42	$0.07	-$0.47	Sep	-$0.010
Soybeans:	$9.03	$0.23	-$0.67	Aug	$0.000
SRW Wheat:	$5.23	$0.28	-$0.32	Sep	$0.020
HRW Wheat:	$4.86	$0.31	-$0.74	Sep	$0.000
HRS Wheat:	$7.63	$0.33	-$0.53	Sep	-$0.110

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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