DTN Early Word Grains
A Frost-Free Wednesday Morning
December corn was 2 cents lower, November soybeans were 2 cents lower, and December Chicago (SRW) wheat was 3 cents lower.
CME Globex Recap:Grain and oilseed markets were showing small losses early Wednesday, not surprising given the degree of the rally posted Tuesday. Early frost fears weren't realized, again, allowing corn and soybeans to ease back from recent highs. Outside commodities were mixed with softs lower, including cotton, energies mostly higher, and metals still strong. The U.S. dollar index was down again on stronger signals that the Federal Reserve may not raise interest rates in September. DJIA futures were posting a modest gain falling Tuesday's sharp sell-off.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 234.25 points (1.1%) lower at 21,753.31, the NASDAQ Composite lost 59.76 points (0.9%) to 6,375.57, and the S&P 500 fell 18.70 points (0.8%) to 2,457.85 Tuesday. DJIA futures were 3 points higher early Wednesday morning. Asian markets closed mostly lower with Japan's Nikkei down 27.84 points (0.1%), Hong Kong's Hang Seng off 127.59 points (0.5%), and China's Shanghai Composite adding 1.07 points. European markets were trading lower with London's FTSE 100 down 36.40 points (0.5%), Germany's DAX losing 5.31 points, and France's CAC 40 off 9.17 points (0.2%). The euro gained 0.0010 to 1.1925 while the U.S. dollar index lost another 0.14 to 92.15. December 30-year T-Bonds were 1/32 higher at 157'01 while December gold added $0.80 to $1,345.30. Crude oil was $0.24 higher at $48.90 while Brent crude gained $0.46 to $53.84. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | December corn remains in a minor (short-term) uptrend. | 1) | The carry in the December-to-March corn spread continues to cover a bearish level of calculated full commercial carry. |
| 2) | Similar to December corn, November soybeans are showing a solid short-term uptrend on its daily chart. | 2) | The carry in the November-to-January soybean futures spread continues to border on covering a bearish level of calculated full commercial carry. |
| 3) | December Chicago wheat remains in a minor (short-term) uptrend on its daily chart. | 3) | The long-term commercial outlook for winter wheat remains extremely bearish. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Dec corn has hit the "Pause" button on its minor (short-term) uptrend, with recent activity looking to be a bullish pennant (lower highs, higher lows). A break out above $3.60 1/4 Wednesday would signal a resumption of the uptrend with a target of $3.72. Overnight trade volume (futures only) was low at 8,400 contracts through early Wednesday. Fundamentally there is little fresh news, with morning temperatures holding above frost levels across the U.S. Midwest growing area. Key to Wednesday's activity could be commercial interest. If this group starts selling again, pushing the carry in the December-to-March futures spread beyond 13 cents, it could trigger a light round of renewed noncommercial selling. Delivery of 215 contracts was reported against the September issue, putting the total at 2,615 contracts.
SOYBEANS Tuesday's spike rally by November soybeans looks to be Wave 3 of a standard 5-wave minor (short-term) uptrend. As expected, the contract ran into resistance near $9.69, a price that marks the 38.2% retracement level of the previous downtrend from $10.47 through the low of $9.21. Given the ongoing pattern, Wave 4 should see the contract continue to pull back before Wave 5 takes the contract to a new high (for this move) near the 50% retracement level of $9.84. Overnight trade volume (futures only) was moderate at 11,400 contracts. Despite frequent announcements of new-crop export sales, the carry in the November-to-January futures spread continues to cover a bearish 67% of calculated full commercial carry. Delivery of 73 contracts was reported against the September issue, putting the total at 75 contracts.
WHEAT December Chicago wheat remains in a minor (short-term) 5-wave uptrend, though in position for Wave 1 to have peaked and Wave 2 to possibly pull the contract back to support at $4.28 1/4. Upside remains limited by the market's continued bearish fundamentals, reflected in the strong carry of winter wheat's (both Chicago and Kansas City) forward curves showing strong carry. Continued pressure on the U.S. dollar index could spark light commercial buying interest, similar to what was seen Tuesday. Delivery of 143 contracts was reported against the September Chicago issue, putting its total at 143 contracts. Delivery of 158 contracts was reported against the September Kansas City issue, putting its total at 904 contracts.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.12 | $0.04 | -$0.47 | Dec | $0.008 |
| Soybeans: | $9.04 | $0.18 | -$0.65 | Nov | -$0.011 |
| SRW Wheat: | $3.98 | $0.05 | -$0.45 | Dec | $0.007 |
| HRW Wheat: | $3.60 | $0.09 | -$0.85 | Dec | $0.024 |
| HRS Wheat: | $5.78 | -$0.01 | -$0.51 | Dec | $0.019 |
Darin Newsom can be reached at darin.newsom@dtn.com
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