DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was 1 cent lower, November soybeans were 2 cents lower, and December Chicago (SRW) wheat was 1 cent lower. .

CME Globex Recap:

The grain and oilseed complex was mostly lower early Tuesday, not overly surprising given the solid rallies seen in corn and wheat Monday. Minneapolis spring wheat was able to move higher overnight, though it didn't show as strong of gains as winter wheat markets the previous session. Cotton also gave back some of its gains, while the energy complex was higher and gold was lower. The U.S. dollar remains firm, as DJIA futures rallied once again overnight.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 54.67 points (0.2%) lower at 23,273.96, the NASDAQ Composite lost 42.23 points (0.6%) to 6,586.83, and the S&P 500 fell 10.23 points (0.4%) to 2,564.98 Monday. DJIA futures were 48 points higher early Tuesday morning. Asian markets closed mostly higher with Japan's Nikkei up 108.52 points (0.5%), Hong Kong's Hang Seng down 150.91 points (0.5%), and China's Shanghai Composite gaining 7.55 points (0.2%). European markets were trading mostly higher with London's FTSE 100 off 0.68 point, Germany's DAX gaining 22.92 points (0.2%), and France's CAC 40 adding 12.78 points (0.2%). The euro was 0.0005 higher at 1.1755 while the U.S. dollar index gained 0.02 to 93.87. December 30-year T-Bonds were 15/32 lower at 151'27 while December gold dipped $0.90 to $1,280.00. Crude oil was $0.38 higher at $52.28 while Brent crude added $0.35 to $57.72. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.

	BULL		BEAR
1)	Trade volume in the corn market is increasing, even on days the market rallies, indicating the market is coming back to life.	1)	Open interest for December corn decreased during Monday's rally, indicating the move was driven by short-covering rather than new buying interest.
2)	Deferred soybean spreads continue to cover a neutral-to-bearish level of calculated full commercial carry, rather than bearish like corn.	2)	November soybeans continue to fall back in search of technical support.
3)	Winter wheat contracts are nearing technical indicators that short-term trends are turning up.	3)	Winter wheat futures spreads continue to reflect a bearish long-term view of supply and demand.

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 The corn market was lower overnight into Tuesday, not surprising given the degree of Monday's rally. However, it should be noted that open interest in the December issue dropped by approximately 10,000 contracts Monday indicating much of the support came from noncommercial short-covering rather than new buying interest. Last Friday's CFTC Commitments of Traders report (legacy, futures only) showed this group increasing their net-short futures position by 2,517 contracts (as of Tuesday, Oct. 17). This put the total at 64,177 contracts, their largest net-short futures positon in corn since last May. Meanwhile, the market's forward curve remains bearish, giving traders little incentive to do much besides cover short futures short-term. Overnight trade volume was decent at 13,300 contracts (futures only), indicating Tuesday could see active trade once again.

SOYBEANS The overnight session saw November soybeans erase Monday's small rally as the contract continues to slide back toward technical support near $9.72. Commercial buying interest has disappeared recently, allowing futures contracts to fall. However, the November-to-January futures spread has stabilized, maintaining its carry in the 10-cent to 10 3/4-cent area, still covering a bearish level of calculated full commercial carry. However, it should be noted that heading into Tuesday's session deferred futures spreads are not bearish, but rather neutral-to-bearish. If these spreads can also start to stabilize, or slow their downtrends (strengthening carry) it could draw renewed buying interest back to the market.

WHEAT Winter wheat contracts were quietly lower early Tuesday morning, giving back a small portion of Monday's impressive rally. Commercial buying has been providing support to the Chicago SRW market for a number of weeks, trimming the carry in the December-to-March futures spread from 23 cents to the most recent 18 1/4 cents (weekly close-only). On the other hand, the Kansas City December-to-March spread continues to troll along its bottom near 18 cents. Both are still considered bearish, despite the weakening carry in Chicago. Technically, December Chicago wheat continues to hold above its low of $4.22 1/2, though could slip back to test this price at least one more time before actually establishing a short-term uptrend.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.07	$0.07	-$0.44	Dec	$0.000
Soybeans:	$9.01	$0.02	-$0.80	Nov	$0.002
SRW Wheat:	$3.98	$0.11	-$0.39	Dec	$0.004
HRW Wheat:	$3.60	$0.10	-$0.73	Dec	-$0.004
HRS Wheat:	$5.76	$0.02	-$0.39	Dec	-$0.014

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

(BAS)

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