DTN Early Word Grains
A Little Green to Start the Week
December corn was fractionally higher, November soybeans were 1 cent higher, and December Chicago (SRW) wheat was fractionally lower.
CME Globex Recap:The grain and oilseed complex was mostly higher early Monday morning, led by a quiet rally in soybeans. Corn and wheat showed fractional gains, though Minneapolis spring wheat bounced 2 cents. In other news, cotton posted a strong rally on renewed commercial buying. The U.S. dollar continues to move higher on chatter from the White House on who the president's next Fed Chairman might be. The stronger dollar put pressure on gold overnight and erased most of a modest early rally in the energy complex.
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The Dow Jones Industrial Average closed 165.59 points (0.7%) higher at 23,328.63, the NASDAQ Composite gained 23.99 points (0.4%) to 6,629.05, and the S&P 500 rallied 13.11 points (0.5%) to 2,575.21 Friday. DJIA futures were 25 points higher early Monday morning. Asian markets closed mostly higher with Japan's Nikkei up 239.01 points (1.1%), Hong Kong's Hang Seng down 181.36 points (0.6%), and China's Shanghai Composite gaining 2.05 points. European markets were trading higher with London's FTSE 100 up 8.86 points (0.1%), Germany's DAX gaining 70.38 points (0.5%), and France's CAC 40 adding 34.35 points (0.6%). The euro was 0.0041 lower at 1.1741 while the U.S. dollar index gained 0.29 to 93.95. December 30-year T-Bonds were 8/32 lower at 151'30 while December gold fell $4.00 to $1,276.50. Crude oil was $0.04 higher at $51.88 while Brent crude lost $0.11 to $57.64. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.
| BULL | BEAR | ||
| 1) | The best chance corn has at a rally Monday could be spillover buying from soybeans again. | 1) | Increased overnight trade volume combined with December corn sitting near its contract could lead to a new low being posted Monday. |
| 2) | Despite last week's sell-off, November soybeans remain in a short-term uptrend on its daily chart. | 2) | Commercial selling in November soybeans, tied to harvest, could continue this week. |
| 3) | A rally in Minneapolis spring wheat could provide light support to winter markets early Monday. | 3) | December Chicago wheat is poised to move to a new contract low early this week. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN December corn continues to hug what used to be its contract low of $3.44 1/4, before the pre-report move to a new low of $3.42 1/2 a couple weeks ago now. However, as with Friday, the overnight session saw higher trade volume (futures only) with 16,800 contracts of December changing hands. This could once again suggest a more active Monday trade, a threat to market bulls given the previously mentioned proximity to contract lows. Key to Monday's session could be commercial activity as merchandisers roll out of bed following a busy harvest weekend. If futures spreads start to put pressure on the market, reflecting commercial selling, December corn could post a new low. Trends on both weekly and monthly charts are pointing down with next major (long-term) support on the latter at $3.39.
SOYBEANS Last week saw November soybeans fall back from a test of minor (short-term) resistance on its daily chart near $9.99, closing lower four out of five days. Despite that, the contract remains in a minor (short-term) uptrend on its daily chart. Trendline support Monday is calculated at $9.70 1/4, just below retracement support at $9.71 3/4. As with December corn, overnight volume (futures only) was decent at 32,100 contracts of November trading, pointing to a more active day. All eyes will be on activity in spreads again as the market's forward curve continues to grow more bearish through a stronger carry.
WHEAT Winter wheat contracts were unchanged to fractionally higher early Monday morning. The key feature could be December Chicago's proximity to its contract low of $4.22 1/2, posting an overnight low of $4.25 1/4. Though technically (daily, weekly stochastics) and fundamentally (five-year weekly close price distribution) oversold the market continues to struggle generating noncommercial buying interest. Last Friday's CFTC Commitments of Traders report showed this group adding 7,559 contracts to their already net-short futures position (as of Tuesday, Oct. 17). Meanwhile, light commercial buying over recent weeks whittled the carry in the December-to-March Chicago futures spread from an extremely bearish 23 cents to a still bearish 18 1/2 cents.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.01 | -$0.05 | -$0.44 | Dec | -$0.002 |
| Soybeans: | $8.99 | -$0.09 | -$0.80 | Nov | -$0.011 |
| SRW Wheat: | $3.87 | -$0.07 | -$0.39 | Dec | $0.001 |
| HRW Wheat: | $3.50 | -$0.06 | -$0.73 | Dec | $0.005 |
| HRS Wheat: | $5.74 | -$0.03 | -$0.38 | Dec | $0.018 |
Darin Newsom can be reached at darin.newsom@dtn.com
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