DTN Early Word Grains
T'd Up
December corn was 3 cents higher, November soybeans were 6 cents higher, and September Minneapolis (HRS) wheat was 3 cents higher.
CME Globex Recap:After Tuesday's sharp break, a move tied to short-term technical signals on daily charts, the soybean market was able to stabilize overnight into Wednesday morning. This provided light support to corn and wheat markets as well. Outside commodities were mostly lower, though cotton, lumber, and heating oil were able to post gains. The U.S. dollar index was down while higher DJIA futures point to continued strength when equities open later in the morning.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 72.80 points (0.3%) higher at 21,963.92, the NASDAQ Composite gained 14.82 points (0.2%) to 6,362.94, and the S&P 500 added 6.05 points (0.2%) to 2,476.35 Tuesday. DJIA futures were 45 points higher early Wednesday morning. Asian markets closed mostly higher with Japan's Nikkei up 94.25 points (0.5%), Hong Kong's Hang Seng gaining 67.15 points (0.2%), and China's Shanghai Composite down 7.58 points (0.2%). European markets were trading mostly lower with London's FTSE 100 down 28.51 points (0.4%), Germany's DAX off 23.43 points (0.2%), and France's CAC 40 off 13.38 points (0.3%). The euro was 0.0033 higher at 1.1834 while the U.S. dollar index slipped 0.07 to 92.96. September 30-year T-Bonds were 10/32 lower at 153'23 while December old dropped $6.50 to $1,272.90. Crude oil was $0.11 lower at $49.05 while Brent crude dipped $0.01 to $51.77. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.
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| BULL | BEAR | ||
| 1) | December corn has moved into a technically oversold short-term situation. | 1) | December corn still has room to extend its recent sell-off, technically. |
| 2) | The November soybean contract is nearing the completion of its short-term downtrend. | 2) | November soybeans have not yet reached downside technical targets. |
| 3) | The long-term downtrend in the U.S. dollar index could provide support to the wheat complex. | 3) | Strong downtrends continue to be seen in wheat futures spreads, reflecting a more bearish view of long-term supply and demand. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN December corn looks to be near the end of the minor (short-term) sell-off on its daily chart. Tuesday's soybean-inspired break took the contract to a test of the low end of its minor sideways-to-down trend at the previous low of $3.74. Tuesday's low was $3.75 3/4, giving the market a little room to work low if sellers come back to the market during Wednesday's session. However, daily stochastics (short-term momentum study) have moved below the oversold 20% level, indicating the market could soon find renewed weather-related buying interest. One bearish note to Tuesday's technical trade was the increase in daily volume. Longer-term charts show Dec corn to still be in a secondary (intermediate-term, weekly) sideways trend and major (long-term, monthly) uptrend, with key support again at the 4-month low of $3.74 (June 2017).
SOYBEANS From a short-term technical point of view, the November soybean contract did exactly what it was expected to do Tuesday as it finally broke through a double-bottom low near $9.84. The contract has been indicating a minor downtrend on its daily chart since mid-July, with Tuesday's break suggesting a possible extension of the downtrend to near support at $9.40. This price marks the 76.4% retracement level (Fibonacci) of the previous short-term uptrend from $9.07 through the high of $10.47. However, daily stochastics are nearing the oversold level of 20%, possibly limiting the downtrend to support near $9.60 1/2, with an old price gap sitting between $9.63 and $9.58. Overnight trade also did as expected, with soybeans starting lower on follow-through selling before turning higher. And while soybeans could come under pressure before the end of the day another weather-market weekend draws closer. Delivery of 567 contracts was reported against the August issue, putting the total at 1,997 contracts.
WHEAT Technical trends of a different kind continued to dominate the wheat complex during Tuesday's meltdown. The Chicago September-to-December, December-to-March, and new-crop July 2018-to-September 2018 are all showing strong downtrends, reflecting a strengthening carry not only in the 2017-2018 forward curve but 2018-2019 as well. This means the commercial side of the market continues to grow more bearish, even as the U.S. dollar index continued to tumble. Not to be outdone, 2017-2018 Minneapolis spring wheat spreads are also showing strong downtrends with the carry in the September-to-December strengthening to 12 3/4 cents. Though the overnight session saw the complex stabilize, in part because of renewed selling in the U.S. dollar, all three markets (Chicago, Minneapolis, and Kansas City) remain vulnerable to another downturn.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.20 | -$0.07 | -$0.42 | Sep | $0.008 |
| Soybeans: | $9.01 | -$0.33 | -$0.70 | Nov | $0.020 |
| SRW Wheat: | $4.30 | -$0.15 | -$0.31 | Sep | -$0.016 |
| HRW Wheat: | $3.96 | -$0.14 | -$0.69 | Sep | -$0.042 |
| HRS Wheat: | $6.76 | -$0.15 | -$0.42 | Sep | -$0.022 |
Darin Newsom can be reached at darin.newsom@dtn.com
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