DTN Early Word Grains
Did Someone Say "Turnaround"?
December corn was 3 cents lower, November soybeans were 8 cents lower, and September Kansas City (HRW) wheat was 2 cents lower.
CME Globex Recap:After continuing their recent rally on the open Monday evening, grain markets traded higher for part of the overnight session before turning lower through early Tuesday morning. Such an overnight development isn't unusual given the degree of the recent rally and despite NASS' latest round of weekly crop condition numbers that were bullish across the board for spring grains. Outside markets were also under pressure with losses seen in metals and most of the energies, the outlier once again being natural gas. Financials were split with DJIA futures lower and the U.S. dollar index showing a small gain.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 5.82 points lower at 21,408.52, the NASDAQ Composite gained 23.31 points (0.4%) to 6,176.39, and the S&P 500 added 2.25 points (0.1%) to 2,427.43 Monday. DJIA futures were 10 points lower early Tuesday morning. Asian markets closed mostly higher with Japan's Nikkei up 114.50 points (0.6%), Hong Kong's Hang Seng gaining 377.58 points (1.5%), and China's Shanghai Composite off 9.59 points (0.3%). European markets were trading mostly lower with London's FTSE 100 down 52.49 points (0.7%), Germany's DAX up 35.85 points (0.3%), and France's CAC 40 off 3.05 points. The euro was down 0.0003 at 1.1396 while the U.S. dollar index added 0.06 to 96.12. September 30-year T-Bonds were 10/32 lower at 151'22 while August gold lost $3.10 to $1,210.10. Crude oil was $0.40 lower at $44.00 while Brent crude dipped $0.38 to $46.40. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.
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| BULL | BEAR | ||
| 1) | NASS weekly crop condition numbers resulted in a DTN Crop Condition Index for corn of 155 points, down 8 points from the previous week. | 1) | Tuesday morning weather maps are showing rains over parts of the western Midwest, possibly pressuring corn. |
| 2) | NASS weekly crop condition numbers resulted in a DTN Crop Condition Index for soybeans of 147 points, down 7 points from the previous week. | 2) | November soybeans are close to establishing a short-term bearish technical signal on its daily chart. |
| 3) | NASS weekly crop condition numbers resulted in a DTN Crop Condition Index for hard red spring wheat of 44 points, down 21 points from the previous week. | 3) | Commercial selling could increase in winter wheat markets. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Corn contracts were showing small losses early Tuesday morning. That fact really isn't earth shaking news given the degree of the recent minor uptrend posted by new-crop December from $3.74 (June 23) through the overnight high of $4.17 1/4. This move has created a short-term overbought situation, technically, that could result in bearish retracement over the coming days and weeks. If weather cooperates, that is. For as it normally is this time of year, corn is being driven by the latest weather forecasts. Yes, Monday saw rain falling over parts of the U.S. Midwest do little to stop the surge in corn prices. Tuesday morning has weather maps showing rains stretching over parts of Iowa. But the bottom line is a more general wet weather pattern needs to be seen to put the brakes on the intermediate-term and long-term bullish moves being seen on corn's weekly and monthly charts. Delivery of 526 contracts was reported against the July issue, putting the total at 8,848 contracts.
SOYBEANS Soybean contracts were trading lower early Tuesday morning. As with corn, this isn't a startling development given the reach of the recent rally. New-crop November has gained almost $1.50 moving from its June 23 low of $9.07 through the overnight high of $10.47. And while its new-crop forward curve remains bullish, new-crop soybeans could see a bearish technical pattern established on its short-term daily chart if November trades below Monday's low of $10.25 1/4. If it happens it would suggest the minor trend has turned down ahead of USDA's next set of crop production and supply and demand data scheduled for release Wednesday. Delivery of 180 contracts was reported against the July issue, putting the total at 5,493 contracts.
WHEAT Winter wheat contracts were showing small losses early Tuesday as both Chicago and Kansas City pause to catch their breath following recent rallies. Unlike corn and soybeans, and spring wheat for that matter, winter wheat markets are showing possible topping formation on weekly charts with this week's range well inside what was seen last week. If commercial pressure starts to build, most notably in futures spreads or basis, both Chicago and Kansas City could quickly move below initial price support levels on weekly charts. Such a development isn't likely to be seen Tuesday, though, with spillover support from Minneapolis hard red spring wheat still expected. Delivery of 11 contracts was reported against the July Chicago, putting its total at 958 contracts. Another 1 contract was reported delivered against the July Kansas City issue increasing its total to 2,074 contracts.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.57 | $0.09 | -$0.45 | Sep | -$0.001 |
| Soybeans: | $9.58 | $0.23 | -$0.66 | Aug | -$0.011 |
| SRW Wheat: | $5.17 | $0.15 | -$0.33 | Sep | -$0.005 |
| HRW Wheat: | $4.88 | $0.14 | -$0.69 | Sep | $0.002 |
| HRS Wheat: | $7.57 | $0.31 | -$0.40 | Sep | $0.007 |
Darin Newsom can be reached at darin.newsom@dtn.com
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