DTN Early Word Grains

Two Sides to Every Market

6:00 a.m. CME Globex:

December corn was 6 cents higher, November soybeans were 5 cents higher, and September Minneapolis (HRS) wheat was 6 cents higher.

CME Globex Recap:

The overnight session saw grains and oilseeds trade both sides of unchanged, with most sitting near their highs early Wednesday morning. A mostly blank weather map helped erase the initial sell-off that saw soybeans fall 5 cents, corn lose 3 cents, and Minneapolis wheat drop 4 cents. Outside markets were mostly higher with gains seen in energies and most of the softs. However, metals were under light pressure as the U.S. dollar index posted a small rally. DJIA futures were down slightly.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 54.99 points (0.3%) lower at 21,574.73, the NASDAQ Composite gained 29.87 points (0.5%) to 6,344.31, and the S&P 500 added 1.47 points to 2,460.61 Tuesday. DJIA futures were 5 points lower early Wednesday morning. Asian markets closed higher with Japan's Nikkei up 20.95 points (0.1%), Hong Kong's Hang Seng gaining 147.22 points (0.6%), and China's Shanghai Composite up 43.41 points (1.4%). European markets were trading mixed with London's FTSE 100 up 13.60 points (0.2%), Germany's DAX adding 6.37 points, and France's CAC 40 rallying 8.94 points (0.2%). The euro was down 0.0022 at 1.1533 while the U.S. dollar index gained 0.05 to 94.73. September 30-year T-Bonds were 3/32 lower at 153'24 while August gold lost $2.40 to $1,239.50. Crude oil was $0.15 higher at $46.55 while Brent crude rallied $0.23 to $49.07. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.

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BULL BEAR
1) Subsoil moisture is decreasing quickly in key corn growing states. 1) Corn has shown a willingness to falter late in session the last couple days.
2) Spillover buying from corn could support soybeans early Wednesday. 2) The minor (short-term) trend in November soybeans remains down.
3) Minneapolis spring wheat could try to test its recent highs. 3) Minneapolis spring wheat futures spreads are in sharp downtrends, indicating continued commercial selling.

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 It's all about the weather maps, again, Wednesday morning as a largely blank slate helped new-crop December corn rally overnight. DTN Senior Ag Meteorologist Mike Palmerino posted a blog Tuesday afternoon ("Trending Drier") that showed an updated soil moisture map that indicated parts of Nebraska and Iowa were nearly as dry as most of the U.S. Northern Plains. To some (including me) subsoil has been the key component holding back a potential rally in corn, and that well looks to be running dry, or at least dryer, as days go by without rain and with hotter than normal daytime (and overnight) temperatures. A Wednesday rally would fit corn's minor (short-term) technical patterns after both old-crop September and new-crop Dec held support recently. This could set the stage for a test of the recent highs of $4.04 3/4 and $4.17 1/4 respectively.

SOYBEANS The minor (short-term) downtrend in soybeans looked to be gaining momentum shortly after the overnight session opened Tuesday evening as contracts quickly fell about 5 cents. But a funny thing happened on the way to $9.40 (new-crop November), buyers came back to the market and pushed Nov beans to a 7-cent gain. While it still looks vulnerable on its daily chart, the November contract is holding early Wednesday morning. Fundamentally there's not a lot of fresh news other than blank weather maps and dwindling subsoil moisture calculations (see the discussion in the corn segment). Soybeans could be a follower market over the course of Wednesday's session, taking its cues from the expected ebb and flow in corn. However, if November falls below its Monday low of $9.93 3/4, things could get interesting in a hurry.

WHEAT If it hasn't already, Minneapolis spring wheat is likely approaching the tipping point when rains no longer matter. Early harvest has begun in some parts, usually an indicator that a short-term supply-driven spike rally is about to come to an end. The September contract is still well below its recent high of $8.68 1/2, with its daily chart continuing to show the presence of a minor (short-term) downtrend. The most ominous signal for spring wheat remains the downtrend in futures spreads with the September-to-December showing a small carry of 2 1/2 cents. While not bearish in its own right, this spread was recently trading at a double-digit inverse. As for winter wheat, contracts were showing small gains early Wednesday morning as both Chicago (SRW) and Kansas City (HRW) continue to ride spring wheat's coattails.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.33 $0.02 -$0.44 Sep $0.000
Soybeans: $9.25 $0.05 -$0.65 Aug $0.005
SRW Wheat: $4.71 -$0.03 -$0.32 Sep -$0.009
HRW Wheat: $4.36 -$0.04 -$0.67 Sep -$0.002
HRS Wheat: $7.39 $0.13 -$0.41 Sep $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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