DTN Early Word Grains
Fall-o-through Buying
December corn was 1 cent higher, November soybeans were 3 cents higher, and December Chicago (SRW) wheat was 4 cents higher.
CME Globex Recap:Rather than turn around and give back some of Thursday's impressive gains, the grain and oilseed complex was trading higher early Friday morning on light follow-through buying. Energies turned lower after an explosive last day of August saw the expiring September contract reach $2.17. Financial markets were glowing green again ahead of the August nonfarm payroll and unemployment numbers. Gold was also higher after a big rally to close the previous month.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 55.67 points (0.2%) higher at 21,948.10, the NASDAQ Composite gained 60.35 points (1.0%) to 6,428.66, and the S&P 500 rallied 14.06 points (0.6%) to 2,471.65 Thursday. DJIA futures were 34 points higher early Friday morning. Asian markets closed mostly higher with Japan's Nikkei up 45.23 points (0.2%), Hong Kong's Hang Seng off 17.14 points, and China's Shanghai Composite gaining 6.31 points (0.2%). European markets were trading higher with London's FTSE 100 up 15.57 points (0.2%), Germany's DAX gaining 79.65 points (0.6%), and France's CAC 40 adding 43.00 points (0.8%). The euro lost 0.0018 to 1.1891 while the U.S. dollar index gained 0.09 to 92.65. December 30-year T-Bonds were 5/32 lower at 155'30 while December gold added $1.60 to $1,323.80. Crude oil was $0.53 lower at $46.70 while Brent crude slipped $0.50 to $52.36. China's Dalian soybean futures were lower overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | December corn looks to have established a short-term uptrend on its daily chart, and is in position to do the same on its weekly chart. | 1) | The carry in the December-to-March corn spread continues to cover a bearish level of calculated full commercial carry. |
| 2) | November soybeans continue to show a short-term uptrend on its daily chart. | 2) | Unshipped old-crop export sales remain a bearish factor for soybeans. |
| 3) | December Chicago wheat posted a new 4-day high, confirming a turn to a short-term uptrend. | 3) | The long-term commercial outlook for winter wheat remains extremely bearish. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Thursday's rally in corn was interesting for a number of reasons. First, it was the 1-year anniversary of the previous spike low in the corn market. Next, open interest (futures only) for the Dec contract increased over the course of the session suggesting it was more than just end-of-the-month short-covering in play. Some of that buying came from commercial traders, as the December-to-March futures spread trimmed its carry slightly to 12 3/4 cents. Lastly, from a technical point of view, December corn looks to have established (again) a minor (short-term) uptrend on its daily chart and is in position to do the same on its weekly chart. Fundamentally has anything about the market changed? No, the nearby futures spread remains bearish. But the market had dipped deep into its 5-year price distribution range while showing signs of being sharply oversold leading to increased buying interest that carried over into early Friday. Delivery of 832 contracts was reported against the September issue, putting the total at 1,676 contracts.
SOYBEANS The soybean market traded higher overnight into Friday morning, though the November contract continues to be stymied by minor (short-term) 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 low of $9.21. If the contract can break through this resistance, and technically it looks like it should, the next target is up at $9.69. Fundamentally there is some concern following Thursday's weekly export sales and shipment numbers for the week ending Thursday, August 24. New old-crop sales were reported, increasing unshipped sales to 126.5 mb. If not shipped or canceled the last reporting week of the 2016-2017 marketing year, this week, then those bushels will likely be rolled ahead to 2017-2018 possibly displacing some potential new-crop sales. Delivery of 1 contract was reported against the September issue, putting the total to 2 contracts.
WHEAT Winter wheat markets were trading higher again early Friday morning. As discussed previously in this space, December Chicago wheat looks to have established a minor (short-term) uptrend. Overnight trade saw it post a new 4-day high of $4.39 1/2, confirming other short-term technical signals that would suggest the contract could begin to build bullish momentum. And while the long-term commercial outlook remains bearish, as indicated by the strong carry in the forward curve for both Chicago and Kansas City, winter wheat could find a price vacuum where traders are less enthusiastic about selling, allowing both markets to rally. There continues to be no deliveries reported against the September Chicago contract. Delivery of 275 contracts was reported against the September Kansas City issue, putting its total at 550 contracts.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.08 | $0.13 | -$0.50 | Dec | $0.004 |
| Soybeans: | $8.83 | $0.11 | -$0.63 | Nov | -$0.015 |
| SRW Wheat: | $3.86 | $0.09 | -$0.48 | Dec | $0.043 |
| HRW Wheat: | $3.46 | $0.09 | -$0.90 | Dec | $0.022 |
| HRS Wheat: | $5.86 | -$0.15 | -$0.54 | Dec | $0.006 |
Darin Newsom can be reached at darin.newsom@dtn.com
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