DTN Early Word Grains

Grains Can't Hold Early Overnight Gains

6:00 a.m. CME Globex:

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

CME Globex Recap:

Like the Los Angeles Dodgers in Game 2 of the World Series Wednesday night, grains couldn't hold an early lead (rally). Early Thursday morning finds the grain and oilseed complex trading mostly lower though with corn, wheat and soybean meal showing small losses while oats, rice, soybeans and bean oil were slightly higher. Other commodities were equally mixed with softs mostly higher, energies mostly lower and metals mixed. The U.S. dollar index was posting a small gain, DJIA a small loss to start the day.

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OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 112.30 points (0.5%) lower at 23,329.46, the NASDAQ Composite lost 34.54 points (0.5%) to 6,563.89, and the S&P 500 fell 11.98 points (0.5%) to 2,557.15 Wednesday. DJIA futures were 1 point lower early Thursday morning. Asian markets closed mixed with Japan's Nikkei 225 up 32.16 points (0.1%), Hong Kong's Hang Seng down 100.51 points (0.4%), and China's Shanghai Composite gaining 10.67 points (0.3%). European markets were trading mostly higher with London's FTSE 100 gaining 25.47 points (0.3%), Germany's DAX up 32.39 points (0.3%) and France's CAC 40 adding 16.44 points (0.3%). The euro was 0.0001 higher at 1.1814 while the U.S. dollar index added 0.06 to 93.69. December 30-year T-Bonds were 12/32 higher at 151'09 while December gold gained $0.80 to $1,279.80. Crude oil was $0.09 higher at $52.27 while Brent crude was up $0.01 at $58.45. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.

BULL BEAR
1) Corn's low price and volatility could still spark noncommercial short-covering to close out the week. 1) Total export shipments of corn, through a week ago, are expected to still be running well behind average pace.
2) Weekly export shipments of soybeans, though a week old, are expected to be large. 2) Commercial selling in soybeans continues to cool bullish momentum in the market.
3) Winter wheat contracts are nearing technical indicators that intermediate-term trends are turning up. 3) Weekly export shipments of wheat, for a week ago, are expected to be dismal in Thursday morning's report.

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MORE COMMODITY-SPECIFIC COMMENTS

CORN Overnight trade volume has turned light again, with the December issue registering 7,000 contracts changing hands overnight through early Thursday morning. Meanwhile, after the excitement of the rally from Monday's low of $3.43 (within a 1/2 cent of its contract low) through Wednesday's early high of $3.55 1/4, December corn looks to be settling back into its rangebound pattern. And yes, that pattern remains sideways to down since the December contract was unable to close above trend-line resistance early this week. Fundamentally, there isn't much news to change the direction of the market. Harvest continues to plug along with final results not expected until January's USDA reports. Thursday will see the release of weekly export sales and shipments numbers for the week ending Thursday, Oct. 19, and most everyone will get excited about what could be a large sales number again. But, weekly shipments needs to come in greater than 71 million bushels to get total shipments back to the four-year average of 230 mb for this point in the marketing year. That isn't likely to happen. Monday's weekly export inspection figure covering the same timeframe came in at 24.2 mb.

SOYBEANS Soybean contracts were showing small gains early Thursday morning on modest trade volume of roughly 7,000 contracts for both the November and January issues. Both are testing short-term technical trend-line support with November holding above $9.73 1/2 and January basically sitting on $9.86 1/2. From a technical point of view, Thursday could be an important session for soybeans to see if enough buying can be found to hold these support levels and start to generate bullish momentum again. Fundamentally, there isn't much to get excited about, though harvest is nearing completion in several areas. This could lead to less commercial selling, pressure that widened the November-to-January carry to 11 cents during Wednesday's session. Weekly export shipments, for the week ending Thursday, Oct. 19, are expected to be large following Monday's export inspection figure of 94.2 mb.

WHEAT The wheat complex was fractionally lower early Thursday morning following a lightly traded overnight session. As has been the case throughout the week, technically December Chicago is on the verge of establishing a secondary (intermediate-term) uptrend on its weekly chart. A similar pattern is seen on the December Kansas City weekly chart. Fundamentally, there isn't much fresh news to generate buying interest, with this past Monday's weekly export inspection figure of 6.2 mb hardly worth mentioning in regards to what Thursday's weekly export shipment number could be. All wheat needs to see roughly 47 mb for the week ending Thursday, Oct. 19 to catch up with the four-year average of 415 mb, and that isn't going to happen.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.08 -$0.01 -$0.44 Dec $0.005
Soybeans: $8.96 $0.00 -$0.79 Nov $0.002
SRW Wheat: $3.97 -$0.02 -$0.38 Dec $0.002
HRW Wheat: $3.61 $0.00 -$0.72 Dec $0.009
HRS Wheat: $5.83 $0.03 -$0.39 Dec $0.013

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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