DTN Early Word Grains
X Marks the Month
December corn was fractionally higher, January soybeans were 2 cents higher, and December Chicago (SRW) wheat was 1 cent lower.
CME Globex Recap:The first morning of November, the X-month in commodity code, finds the grain and oilseed complex mostly higher. The oilseed complex was higher, including Malaysian palm oil and Dalian soybeans, while corn posted fractional gains. Meanwhile winter wheat contracts were lower and Minneapolis spring wheat was sitting near unchanged. Other commodity sectors were mostly higher, with strong gains seen in energies and metals. Softs were mostly lower, only cotton able to rally overnight.
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The Dow Jones Industrial Average closed 28.50 points (0.1%) higher at 23,377.24, the NASDAQ Composite gained 28.71 points (0.4%) to 6,727.67, and the S&P 500 added 2.43 points (0.1%) to 2,575.26 Tuesday. DJIA futures were 121 points higher early Wednesday morning, promising a sharply higher open to the big board. Asian markets closed mostly higher with Japan's Nikkei 225 up 408.47 points (1.9%), Hong Kong's Hang Seng rallying 348.52 points (1.2%), and China's Shanghai Composite adding 2.57 points (0.1%). European markets were trading higher with London's FTSE 100 up 14.45 points (0.2%), Germany's DAX gaining 217.27 points (1.6%) and France's CAC 40 adding 30.97 points (0.6%). The euro was 0.0010 lower at 1.1638 while the U.S. dollar index gained 0.10 to 94.64. December 30-year T-Bonds were 9/32 lower at 152'06 while December gold rallied $10.10 to $1,280.60. Crude oil was $0.65 higher at $55.03 while Brent crude gained $0.66 at $61.60. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.
| BULL | BEAR | ||
| 1) | December corn continues to hold above its contract low as a new month gets under way. | 1) | Corn's long-term trend remains sideways-to-down. |
| 2) | The carry in the January-to-March futures spread isn't as bearish as the carry in the November-to-January spread turned out to be - yet. | 2) | Soybeans January-to-March futures spread is trending down, reflecting a stronger carry and more bearish fundamentals. |
| 3) | The most bullish nugget for the wheat complex continues to be light buying interest in spring wheat. | 3) | Winter wheat is extremely bearish long-term, both technically and fundamentally. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Different month, same story in the corn market as contracts were showing fractional gains early Wednesday morning. However, overnight trade was a bit more active than it has been, not unusual for a Wednesday morning. Dec corn showed trade volume (futures only) of 14,700 contracts and a range of 1 1/2 cents. Recall that Monday's combined trading range (both overnight and day sessions) amounted to only 2 1/2 cents. December corn continues to hold above its contract low of $3.42 1/2, though this low established in October gives the market's long-term monthly chart a more bearish look. Similarly, the DTN National Corn Index (NCI.X, national average cash price) continues to trend sideways-to-down on its long-term monthly chart (for more information, see DTN's Technically Speaking blog later Wednesday morning).
SOYBEANS The global oilseed complex was higher overnight, led by continued rallies in Chicago soybeans and canola. As for the former, the Jan contract is moving sideways on its daily chart between support at the 4-day low of $9.81 and resistance at the 4-day high of $9.93 1/4. Longer-term, the market's monthly chart shows a continued narrowing, consolidation pattern implying a breakout is coming at some point. Given that the most recent supporting technical signals were bullish, a bullish breakout seems the most likely (for more information, see the update Technically Speaking blog on DTN later Wednesday morning). Fundamentally, attention has rolled to the January-to-March futures spread showing a carry of 10 1/4 cents. This continues to cover a slightly bearish 67% of calculated full commercial carry, while trending down (strengthening carry) on its weekly close-only chart. Neither of these would be considered bullish. Delivery of 47 contracts was reported against the November issue, putting the total at 97 contracts.
WHEAT Winter wheat contracts began November much as they finished October, grinding lower to test new lows that were established during Tuesday's session. In the case of December Chicago, that low was $4.16 1/4 with the contract hitting $4.16 1/2 for an overnight low so far. Kansas City Dec was similar with the overnight low of $4.14 1/2 challenging Tuesday's low of $4.13 1/2. Fundamentally winter wheat markets remain long-term bearish, with the carry in forward curves for both continuing to show strong carry. This combined with renewed downtrends on long-term monthly charts indicate a test of major lows may be in the offing sooner rather than later (for more information, see the updated Technically Speaking blog on DTN later Wednesday morning).
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.03 | -$0.02 | -$0.42 | Dec | $0.007 |
| Soybeans: | $8.95 | $0.02 | -$0.89 | Jan | $0.014 |
| SRW Wheat: | $3.84 | -$0.04 | -$0.35 | Dec | $0.020 |
| HRW Wheat: | $3.49 | -$0.02 | -$0.68 | Dec | $0.030 |
| HRS Wheat: | $5.78 | -$0.05 | -$0.35 | Dec | $0.009 |
Darin Newsom can be reached at darin.newsom@dtn.com
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