DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was fractionally lower, November soybeans were unchanged, and December Chicago (SRW) wheat was 2 cents higher.

CME Globex Recap:

The grain and oilseed complex was as mixed as could be Wednesday morning with corn fractionally lower, wheat higher, and soybeans unchanged. Traders continue to focus more on outside markets with crude oil under pressure once again, this time taking gold with it. As for the latter, some of the pressure came from light buying that reemerged in the U.S. dollar. Cotton posted a small rally, though commercial buying wasn't evident overnight.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 56.97 points (0.3%) higher at 21,865.37, the NASDAQ Composite gained 18.87 points (0.3%) to 6,301.89, and the S&P 500 added 2.06 points to 2,446.30 Tuesday. DJIA futures were 25 points higher early Wednesday morning. Asian markets closed mostly higher with Japan's Nikkei up 143.99 points (0.7%), Hong Kong's Hang Seng gaining 329.60 points (1.2%), and China's Shanghai Composite off 1.60 points. European markets were trading higher with London's FTSE 100 up 13.90 points (0.2%), Germany's DAX gaining 48.95 points (0.4%), and France's CAC 40 adding 16.20 points (0.3%). The euro lost 0.0029 to 1.1945 while the U.S. dollar index rallied 0.16 to 92.49. December 30-year T-Bonds were 6/32 higher at 155'28 while December gold dipped $2.40 to $1,316.40. Crude oil was $0.24 lower at $46.20 while Brent crude lost $0.42 to $51.58. China's Dalian soybean futures were lower and Malaysian palm oil futures mostly lower overnight.

	BULL		BEAR
1)	December corn is sharply oversold, technically, possibly generating increased buying interest.	1)	The carry in the December-to-March corn spread continues to cover a bearish level of calculated full commercial carry.
2)	November soybeans remain in a short-term uptrend on its daily chart.	2)	If Hurricane Harvey's second landfall leads to more Gulf Coast port problems, soybean exports could come into question.
3)	December Chicago wheat looks to be in position to begin a short-term uptrend on its daily chart.	3)	The long-term commercial outlook for winter wheat 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 COMMENTS

CORN Overnight trade volume (futures only) was relatively low with roughly 11,800 contracts of new-crop December changing hands. Tuesday saw Dec corn post another new contract low of $3.47, before consolidating above this price overnight. At some point the technical factor of Dec corn being sharply oversold on its daily (short-term) and weekly (intermediate-term) charts should come into play. But for now there remains no fundamental reason for traders, either commercial or noncommercial, to start buying. The December-to-March futures spread continues to show a carry near 13 cents, or roughly 75% of full commercial carry. Meanwhile, corn's daily volatility index has decreased to about 20%, possibly low enough to start creating support from call buyers. One last note regarding corn, the DTN National Corn Index (national average cash price) slipped back below $3.00 when calculated Tuesday afternoon. Sitting at $2.98 puts the NCI.X at its lowest price since the $2.95 of October 12, 2016.

SOYBEANS According to its daily chart, November soybeans remain in a minor (short-term) uptrend. However, the contract has closed lower three consecutive sessions, losing 12 cents along the way. This isn't overly unusual with markets often moving three days (weeks, months) against the prevailing trend. Early Wednesday morning finds Nov beans testing short-term technical support at $9.35 3/4, a price that marks the 50% retracement level of the recent rally from $9.21 to $9.50 1/2. Recall from previous discussions that resistance remains at $9.50 3/4, then $9.69. Fundamentally there is little change of note in soybeans. Traders will continue to monitor Hurricane Harvey as it looks to make landfall along the Gulf Coast again, this time near the border between Texas and Louisiana.

WHEAT Winter wheat contracts were posting gains again early Wednesday, once again led by light noncommercial buying. Tuesday's session, with its spike to a new low before rallying to close higher, could be viewed as a minor (short-term) spike reversal. If so, the argument would be that the minor trend has turned up on daily charts. This does look like a technical possibility, with no fundamental backing, given daily stochastics (short-term momentum study) indicate both Chicago and Kansas City are sharply oversold. While any rally has to be viewed skeptically in winter wheat, if the December Chicago contract can push above its recent high of $4.38 it could trigger increased buying interest.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$2.98	-$0.02	-$0.36	Sep	$0.004
Soybeans:	$8.77	-$0.04	-$0.60	Nov	$0.005
SRW Wheat:	$3.76	$0.02	-$0.27	Sep	-$0.005
HRW Wheat:	$3.33	$0.01	-$0.64	Sep	$0.004
HRS Wheat:	$6.03	-$0.06	-$0.34	Sep	$0.015

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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