DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was fractionally lower, November soybeans were 2 cents higher, and December Chicago (SRW) wheat was fractionlly lower.

CME Globex Recap:

Tuesday morning is similar to Monday morning, which was similar to many mornings before. Corn and wheat are fractionally changed and soybeans are higher. All that's missing is Sonny and Cher coming on the radio. There was little fresh news overnight, though DJIA futures were able to rally again, pulling the U.S. dollar index higher as well. This led to small sell-offs in gold and a mixed energy complex. Softs, including cotton, were under pressure across the board.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 85.45 points (0.4%) lower at 23,348.74, the NASDAQ Composite lost 2.30 points to 6,698.96, and the S&P 500 fell 8.24 points (0.3%) to 2,572.83 Monday. DJIA futures were 36 points higher early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 off 0.06 point, Hong Kong's Hang Seng down 90.65 points (0.3%), and China's Shanghai Composite up 3.00 points. European markets were trading higher with London's FTSE 100 up 27.35 points (0.4%), Germany's DAX gaining 12.03 points (0.1%) and France's CAC 40 adding 10.67 points (0.2%). The euro was 0.0014 lower at 1.1636 while the U.S. dollar index gained 0.09 to 94.61. December 30-year T-Bonds were 3/32 lower at 152'09 while December gold dipped $1.80 to $1,275.90. Crude oil was $0.01 lower at $54.14 while Brent crude slipped $0.05 at $60.85. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

	BULL		BEAR
1)	It's possible, possible, that if soybeans rally Tuesday corn could see light spillover buying interest.	1)	It's more likely corn continues to grind lower, given the strengthening carry of its forward curve.
2)	Despite all the selling, if you tilt your head just right one can still see an uptrend on soybeans' daily chart.	2)	Soybeans could uncover renewed noncommercial selling as the month comes to an end.
3)	It's also possible December Chicago wheat could hold above its contract low.	3)	Winter wheat futures spreads continue to show overwhelmingly bearish fundamentals.

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 "Babe. I got you Babe." Those all too familiar strains are blaring from the computer screen again this morning as corn remains in an endless loop of inactivity. The overnight session saw the Dec contract post a 3/4-cent trading range (yes, you read that right) on volume of only 6,700 contracts (futures only). This sets the stage for another day quite like the one before. You remember Monday, don't you? Dec corn posted a 2 1/2 cent trading range combined (overnight and day session) before finishing unchanged. The most telling factor, fundamentally, is that the December-to-March futures spread continues to show a carry of 14 cents, covering approximately 78% of calculated cost of carry. Recall that 66% is considered bearish.

SOYBEANS "Watch out for that first step, it's a doozy!" Soybean traders will be wary of another late morning to midday break, to see if what happened Monday happens again Tuesday. Yesterday morning found soybeans in familiar territory, posting a small gain, before losing bullish momentum and falling to a lower close. Similar activity would not be surprising Tuesday, particularly if early commercial buying dries up, leaving the day in the hands of noncommercial traders. This group continues to hold a net-long futures position, and with Tuesday being reporting day for this coming Friday's CFTC Commitments of Traders report, as well as the last day of the month, some adjusting of that position is possible before the close. Again, keep an eye on spread activity Tuesday as the 2017 harvest nears its end and export demand remains strong. Initial delivery of 50 contracts was reported against the November issue.

WHEAT "Don't drive angry." Winter wheat contracts were fractionally mixed early Tuesday morning, seemingly in perfect position to drive off a cliff again later in the day. Why would I type such a horrible thing? Well, December Chicago equaled its contract low during Monday's meltdown, setting the stage for either a technical rally or bearish breakout. Given the market's extremely bearish forward curve (series of futures spreads), the latter seems more likely. If indeed Dec wheat decides to accelerate over the edge (beyond its previous lows), the rock floor of $3.86 3/4 (low from August 2016) could be were "deceleration" occurs followed by an explosion.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.06	$0.00	-$0.43	Dec	$0.001
Soybeans:	$8.94	-$0.02	-$0.91	Jan	-$0.004
SRW Wheat:	$3.88	-$0.02	-$0.37	Dec	$0.008
HRW Wheat:	$3.51	-$0.03	-$0.71	Dec	$0.002
HRS Wheat:	$5.83	$0.01	-$0.36	Dec	-$0.001

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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