DTN Early Word Grains
Lower Again Early Wednesday
December corn was 2 cents lower, November soybeans were 1 cent lower, and December Chicago (SRW) wheat was 4 cents lower.
CME Globex Recap:Except for soybean oil and Minneapolis spring wheat the grain and oilseed complex was lower again early Wednesday morning. Outside commodities were mostly lower as well with selling seen in cotton, crude oil, and gold. Many of the other softs rallied, while natural gas and copper posted gains. The U.S. dollar continued to show strength.
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The Dow Jones Industrial Average closed 11.77 points lower at 22,284.32, the NASDAQ Composite gained 9.57 points (0.1%) to 6,380.16, and the S&P 500 added 0.18 point to 2,496.84 Tuesday. DJIA futures were 2 points higher early Wednesday morning. Asian markets closed mixed with Japan's Nikkei down 63.14 points (0.3%), Hong Kong's Hang Seng gaining 129.42 points (0.4%), and China's Shanghai Composite up 1.69 points. European markets were trading mostly higher with London's FTSE 100 up 14.58 points (0.2%), Germany's DAX gaining 64.53 points (0.5%), and France's CAC 40 rallying 9.42 points (0.2%). The euro was 0.0037 lower at 1.1748 while the U.S. dollar index rallied 0.34 to 93.35. December 30-year T-Bonds were 1 4/32 lower at 153'21 while December gold fell $8.60 to $1,292.10. Crude oil was $0.10 lower at $51.78 while Brent crude lost $0.50 to $57.94. China's Dalian soybean futures were higher and Malaysian palm oil futures were mixed overnight.
| BULL | BEAR | ||
| 1) | Corn markets (cash and futures) continue to hold above recent lows. | 1) | Commercial selling is being seen in corn. |
| 2) | It's possible the recent sell-off could generate new export sales of U.S. soybeans. | 2) | November soybeans have established a minor (short-term) downtrend on its daily chart. |
| 3) | Minneapolis spring wheat continues to hint at a possible bullish turn on its weekly charts. | 3) | December Chicago wheat moved into a short-term downtrend on its daily chart at Tuesday's close. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN There's not much new to report in the corn market as the December contract posted another quiet overnight session. Its trading range was only 1 3/4 cents through early Wednesday morning on volume (futures only) of only 7,100 contracts. Dec corn has dipped below $3.53, the midpoint of the sideways range between its contract low of $3.44 1/4 and initial resistance at $3.61 1/2. Meanwhile, the December-to-March futures spread has seen is carry slowly strengthen to 13 cents, covering an increasingly bearish 72.5% of calculated full commercial carry. National average basis (DTN National Corn Index - Dec futures) continues to come in at approximately 45 cents under, much weaker than the 4-year average for this week of 29 cents under. All these factors would suggest the market remains bearish as USDA's Quarterly Stocks report, set for release this coming Friday, draws near.
SOYBEANS As discussed Tuesday, soybean market bears look to have won out as the November contract moved to a new 4-day low of $9.62 1/2 confirming the establishment of a new minor (short-term) downtrend. The contract was immediately testing support at $9.61 3/4, the 38.2% retracement level of the previous minor uptrend from $9.21 through last Friday's high of $9.87. Next support, the 50% retracement level, is down at $9.54 with the 61.8% mark at $9.46 1/4. Overnight trade saw Nov beans post a low of $9.60 before stabilizing slightly. Still, it seems the market is growing more bearish ahead of Friday's Quarterly Stocks report from USDA, a number that will act as the de facto 2016-2017 ending stocks figure until revised somewhere down the road. Commercial pressure continues to build, indicated by the strengthening carry in the November-January futures spread and national average basis (DTN National Soybean Index minus November futures) that continues to weaken.
WHEAT Winter wheat contracts were lower early Wednesday after the December Chicago contract posted a bearish short-term technical signal at Tuesday's close. Daily stochastics (short-term momentum study) established a bearish crossover above the overbought level of 80% Tuesday, indicating the contract's recent minor (short-term) uptrend had come to an end and a downtrend had begun. If so, Tuesday's spike high of $4.60 3/4 proved to be enough of a test of initial resistance at $4.62 1/2 to generate renewed selling interest from both commercial and noncommercial traders. Overnight trade volume (futures only) was actually solid at 8,800 contracts, pushing the market lower. Look for this action to continue throughout Wednesday's session.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.07 | -$0.01 | -$0.45 | Dec | $0.004 |
| Soybeans: | $8.88 | -$0.09 | -$0.75 | Nov | -$0.012 |
| SRW Wheat: | $4.10 | $0.00 | -$0.43 | Dec | -$0.001 |
| HRW Wheat: | $3.74 | -$0.01 | -$0.78 | Dec | $0.006 |
| HRS Wheat: | $5.98 | -$0.01 | -$0.48 | Dec | $0.016 |
Darin Newsom can be reached at darin.newsom@dtn.com
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