DTN Early Word Grains
Back to the Drawing Board
December corn was fractionally higher, November soybeans were fractionally higher, and September Chicago (SRW) wheat was 1 cent lower.
CME Globex Recap:After USDA melted down grain, cotton, and oilseed markets with new crop production numbers, contracts stabilized overnight through early Friday morning. Given the latest crop estimates, debate over weekend weather is now meaningless as rain is no longer needed to generate record production, in theory. Outside markets remain nervous over what could happened politically and militarily this next few days, with both the U.S. dollar and gold stronger while DJIA futures continue to come under pressure.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 204.69 points (0.9%) lower at 21,844.01, the NASDAQ Composite lost 135.46 points (2.1%) to 6,216.87, and the S&P 500 fell 35.81 points (1.5%) to 2,438.21 Thursday. DJIA futures were 17 points lower early Friday morning. Asian markets closed lower Hong Kong's Hang Seng losing 560.49 points (2.0%) and China's Shanghai Composite down 53.21 points (1.6%). European markets were trading lower with London's FTSE 100 off 81.02 points (1.1%), Germany's DAX down 42.40 points (0.3%), and France's CAC 40 losing 53.60 points (1.0%). The euro was 0.0018 lower at 1.1756 while the U.S. dollar index gained 0.07 to 93.49. September 30-year T-Bonds were 8/32 higher at 155'19 while December gold added $3.30 to $1,293.40. Crude oil was $0.27 lower at $48.32 while Brent crude lost $0.21 to $51.69. China's Dalian soybean futures were lower while Malaysian palm oil futures were higher overnight.
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| BULL | BEAR | ||
| 1) | Corn: Check this space again Monday. | 1) | Where to begin? How about the new projection for the third largest U.S. corn crop on record? |
| 2) | If rain was still needed to produce crops, an idea that is now being questioned, November soybean futures could find light buying interest heading into the weekend. | 2) | Renewed selling could be seen in soybeans if another round of old-crop cancelations are announced Friday. |
| 3) | Commercial buying interest is expected to return to Minneapolis spring wheat. | 3) | The long-term view of wheat supply and demand remains extremely bearish. |
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 COMMENTSCORN December corn's technical charts are a wreck Friday morning. The short-term uptrend on its daily chart is gone as the contract moved below support at $3.75 and $3.74, hitting $3.70 1/4 Thursday afternoon. The best chance for still seeing some semblance of a trend is on the market's weekly close-only chart (check DTN Strategies Friday afternoon for updates on this chart), with next support near $3.65. Possibly the most telling technical factor as Thursday's bloodbath occurred was the increase in both daily trade volume and open interest for the Dec contract. This would suggest noncommercial traders were not just covering long futures position, but initiating new short positions. And while this won't show up in Friday afternoon's weekly CFTC Commitment of Traders report, it's possible noncommercial traders have erased a large share of their net-long futures holdings last reported at 148,195 contracts.
SOYBEANS Digging through the technical rubble left from Thursday's implosion finds November soybeans sitting near short-term technical support at $9.40. Given the market is once again oversold, it could uncover buying interest heading into what is expected to be another dry weekend. But as USDA's August Crop Production report implied, rain is no longer needed to make crops. Key to Friday's trade could be action by the commercial side of the market. Keep an eye on the November-to-January spread in particular to see if the November finds some solace in USDA's expected lowering of old-crop ending (new-crop beginning) stocks. Delivery of 5 contracts was reported against the August issue, putting the total at 2,807 contracts.
WHEAT Winter wheat contracts were lower again early Friday morning as continued pressure from a stronger U.S. dollar and bearish fundamentals offset potential spillover support from renewed buying in Minneapolis spring wheat. There commercial traders, laughing all the way to the bank, seem to be on a buying spree after noncommercial interests sold USDA's larger than expected, nearly unbelievable, production estimate of 402 mb. Chicago SRW wheat, as the proxy for the complex in general, continues to struggle with an extremely bearish forward curve. Thursday's WASDE (world numbers) showed an increase in both old-crop and new-crop ending stocks, due in part to the increased production in the states of the former Soviet Union.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.17 | -$0.14 | -$0.40 | Sep | $0.005 |
| Soybeans: | $8.74 | -$0.33 | -$0.66 | Nov | $0.003 |
| SRW Wheat: | $4.11 | -$0.19 | -$0.30 | Sep | -$0.005 |
| HRW Wheat: | $3.81 | -$0.15 | -$0.67 | Sep | $0.008 |
| HRS Wheat: | $6.60 | -$0.30 | -$0.43 | Sep | $0.006 |
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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