DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was fractionally lower, November soybeans were 3 cents higher, and December Chicago (SRW) wheat was 1 cent higher.

CME Globex Recap:

Once again, the grain and oilseed complex was quiet overnight, with another early Friday morning finding markets mostly higher. Only corn was in the red, fractionally, on continued low interest. Other commodity sectors were mixed with softs higher, energies lower (except for natural gas), and metals mostly lower. The U.S. dollar index was higher again after taking a day off, and DJIA futures posted another strong overnight rally.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 5.44 points higher at 23,163.04, the NASDAQ Composite lost 19.15 points (0.3%) to 6,605.07, and the S&P 500 gained 0.84 point to 2,562.10 Thursday. DJIA futures were 82 points higher early Friday morning. Asian markets closed mostly higher with Japan's Nikkei up 9.12 points, Hong Kong's Hang Seng rallying 328.15 points (1.2%), and China's Shanghai Composite gaining 8.48 points (0.3%). European markets were trading mostly higher with London's FTSE 100 up 24.12 points (0.3%), Germany's DAX gaining 43.16 points (0.3%), and France's CAC 40 adding 11.88 points (0.2%). The euro was 0.0045 lower at 1.1807 while the U.S. dollar index gained 0.33 to 93.48. December 30-year T-Bonds were 1 4/32 lower at 152'13 while December gold fell $8.00 to $1,282.00. Crude oil was $0.51 lower at $50.78 while Brent crude lost $0.44 to $56.79. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

	BULL		BEAR
1)	Spillover buying from soybeans could provide support to corn.	1)	The strong carry in corn's forward curve continues to reflect a bearish long-term view of supply and demand.
2)	November beans look to have broken out of a recent short-term consolidation pattern and could now rejoin the minor uptrend on its daily chart.	2)	Rallies in soybeans are expected to be met with increased commercial selling as harvest continues to progress.
3)	Winter wheat contracts established short-term bullish technical signals Thursday and are now set to begin minor uptrends.	3)	Though not as bearish as before, forward curves for winter wheat continue to reflect a long-term bearish commercial outlook.

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 Someday the commentary for corn will change. Someday it will read that, like a wild stallion, corn has jumped the fence that held it rangebound for so long and is running wild and free. Someday the commentary will include a discussion on how volatility is jumping, traders are rushing back to take part, the once-great market is interesting again. However, that day is not today. Not even close. December corn posted another 1 cent range overnight, though interestingly enough, trade volume (futures only) increased dramatically to 17,700 contract through early Friday morning. This could be hinting at an increase in activity heading into the weekend. And with the contract nearer the four-day low of $3.47 3/4 than the four-day high of $3.53 1/4, it could mean corn might see some harvest pressure Friday. On the other hand, if soybeans are able to hold its overnight rally, corn could move higher on pre-weekend, noncommercial short-covering. Either way, it's possible the contract actually posts a trading range of 4 cents or more for the first time this week.

SOYBEANS November soybeans are in position to break out of the recently established bullish consolidation pattern on its daily chart. Last week's rally from Thursday's low of $9.59 through Friday's high of $10.03 1/4 looks to be a technical flagpole, with the subsequent three-day sell-off holding at the 50% retracement level of $9.81 and forming a bullish flag pattern. Trend line resistance off this pattern is calculated at $9.82 Friday, with the contract trading above that mark throughout the overnight session. Based on the old technical rule of thumb that "flags and pennants fly at half-mast," a bullish breakout Friday would project to a target of $10.26. Retracement resistance on the contract's daily chart is in that neighborhood at $10.17 1/4. Fundamentally, there is little fresh news to drive the market up or down, though some harvest pressure could develop if soybeans gain bullish momentum.

WHEAT Winter wheat contracts were showing small gains early Friday as commercial activity continues to yo-yo in Chicago. A day after commercial selling drove the market lower, Chicago spreads hint at light commercial buying interest overnight as the carry in the market's forward curve weakened slightly. While this could be a result of low trade volume, it also would not be surprising given the back-and-forth nature of this group over recent weeks. Furthermore, the trend on the weekly close for the Chicago December-to-March futures spread remains up, showing a weaker carry over time. Though still bearish, it at least reflects the likelihood of increased demand or decreased supplies, resulting in a slightly less bearish view of fundamentals. Add to that Thursday's establishment of bullish technical signals, indicating December Chicago's short-term trend has turned up and the market could maybe, possibly, actually start building some bullish momentum.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.05	$0.01	-$0.44	Dec	$0.004
Soybeans:	$9.08	$0.01	-$0.79	Nov	-$0.010
SRW Wheat:	$3.93	$0.01	-$0.39	Dec	-$0.013
HRW Wheat:	$3.56	$0.01	-$0.73	Dec	$0.001
HRS Wheat:	$5.76	$0.07	-$0.39	Dec	$0.008

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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