DTN Early Word Grains
Storms a Brewin'
December corn was 1 cent lower, November soybeans were 2 cents lower, and December Chicago (SRW) wheat was 1 cent higher.
CME Globex Recap:Hurricane Harvey is expected to make landfall early Saturday morning, southeast of Corpus Christi, Texas. By then the storm is expected to strengthen to a category 3 hurricane, though it already has the attention of domestic energy markets, most notably gasoline. Elsewhere, financial markets were tentative Friday morning as they prepare for a storm of reaction to speeches from U.S. Fed chairwoman Yellen and European Central Bank president Draghi from Jackson Hole, Wyoming. Corn and soybean markets were lower, due in part to another round of rain storms moving over parts of the western U.S. Midwest.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 28.69 points (0.1%) lower at 21,783.40, the NASDAQ Composite lost 7.08 points (0.1%) to 6,271.33, and the S&P 500 dipped 5.07 points (0.2%) to 2,438.97 Thursday. DJIA futures were 23 points higher early Friday morning. Asian markets closed higher with Japan's Nikkei up 98.84 points (0.5%), Hong Kong's Hang Seng rallying 329.56 points (1.2%), and China's Shanghai Composite gaining 60.01 points (1.8%). European markets were trading higher with London's FTSE 100 up 27.90 points (0.4%), Germany's DAX gaining 50.23 points (0.4%), and France's CAC 40 adding 16.96 points (0.3%). The euro gained 0.0006 to 1.1805 while the U.S. dollar index dipped 0.05 to 93.24. December 30-year T-Bonds were unchanged at 154'277 while December gold rallied $0.90 to $1,292.90. Crude oil was $0.33 higher at $47.76 while Brent crude gained $0.34 to $52.38. RBOB gasoline posted a 5 cent rally ahead of Hurricane Harvey making landfall. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | Neither old-crop September nor new-crop December corn posted new contract lows overnight. | 1) | Both old-crop and new-crop corn posted new contract lows Thursday, and were only fractions from these prices early Friday morning. |
| 2) | The minor (short-term) uptrend in new-crop November soybeans remains in place. | 2) | A Friday filled with storms of all types could put pressure on soybeans heading into the weekend. |
| 3) | Winter wheat markets remain sharply oversold, from a technical point of view. | 3) | The long-term commercial outlook for winter wheat remains extremely bearish. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Neither old-crop September nor new-crop December corn posted new contract lows overnight. So there's that. However, both contracts were within fractions of their new lows of $3.40 1/4 and $3.54 1/2 respectively early Friday morning as the market came under light pressure. Selling was most likely tied to the lower soybean market, as traders there watched another August storm develop across parts of the western U.S. Midwest. While rain at this point isn't expected to change corn's potential yield much, momentum on daily, weekly, and is bearish. So much so that indicators on daily charts for both September and December contracts show a sharply oversold situation, though not enough to generate sustained buying interest. Old-crop corn is dealing with remaining bushels coming to town as it prepares for the next harvest and the uncertainty of river basis with Hurricane Harvey churning away in the Gulf of Mexico.
SOYBEANS New-crop November soybeans remain in a short-term uptrend on its daily chart, with initial technical resistance at $9.50 3/4. This price marks the 23.6% retracement level of the previous minor downtrend from $10.47 through the recent low of $9.21. Thursday's high reached $9.47 3/4 before falling back a bit during the overnight session. The contract remains vulnerable to pulling back to a test of its recent low, without changing the direction of its short-term trend. Possible catalysts for selling into the weekend could be Hurricane Harvey possibly disrupting export traffic from Gulf ports, rains over parts of the U.S. Midwest heading into the weekend, and uncertainty over the reaction by the U.S. dollar to speeches later in the day by U.S. Fed chair Yellen and ECB president Draghi.
WHEAT A look at its daily chart shows the possibility that December Chicago wheat is trying to establish a minor (short-term) uptrend. Daily stochastics (short-term momentum indicator) reflect a sharply oversold situation. More importantly, from a technical point of view, the contract posted a bullish reversal Thursday as it traded outside Wednesday's range before closing higher. Meanwhile fundamentals remain bearish, as indicated by the strong carry in the forward curve for both Chicago (SRW) and Kansas City (HRW) wheat markets. While this should limit buying interest, there is always the possibility of light noncommercial interest heading into a weekend.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.06 | $0.01 | -$0.36 | Sep | $0.005 |
| Soybeans: | $8.85 | $0.08 | -$0.61 | Nov | -$0.003 |
| SRW Wheat: | $3.82 | $0.07 | -$0.27 | Sep | $0.011 |
| HRW Wheat: | $3.40 | $0.08 | -$0.66 | Sep | $0.000 |
| HRS Wheat: | $6.12 | $0.12 | -$0.39 | Sep | $0.003 |
Darin Newsom can be reached at darin.newsom@dtn.com
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