DTN Early Word Grains

Houston, We Don't Have a Problem

6:00 a.m. CME Globex:

December corn was 1 cent higher, January soybeans were 5 cents higher, and December Chicago (SRW) wheat was 3 cents higher.

CME Globex Recap:

The Houston Astros won their first World Series Wednesday night meaning the 2017 baseball season is over, so fall harvest can't be far behind. Grain and oilseed markets seemed to celebrate the Astros' win with rallies seen nearly across the board with the exception being bean oil and Malaysian palm oil. Meanwhile softs and energies were mixed while metals were under pressure early Thursday morning. The U.S. dollar index was down slightly, showing no surprise to the FOMC leaving interest rates unchanged Wednesday while keeping the spotlight on December. DJIA futures were also off slightly to start the day.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 57.77 points (0.3%) higher at 23,435.01, the NASDAQ Composite lost 11.14 points (0.2%) to 6,716.53, and the S&P 500 added 4.10 points (0.2%) to 2,579.36 Wednesday. DJIA futures were 13 points lower early Thursday morning. Asian markets closed mostly lower with Japan's Nikkei 225 up 119.04 points (0.5%), Hong Kong's Hang Seng falling 75.42 points (0.3%), and China's Shanghai Composite off 12.60 points (0.4%). European markets were trading mostly lower with London's FTSE 100 up 6.33 points (0.1%), Germany's DAX down 21.41 points (0.2%) and France's CAC 40 losing 2.41 points. The U.S. dollar index lost 0.16 to 94.63. December 30-year T-Bonds were 1/32 higher at 152'25 while December gold fell $0.60 to $1,276.70. Crude oil was $0.10 higher at $54.40 while Brent crude slipped $0.08 at $60.41. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

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BULL BEAR
1) December corn could continue to find support in spillover buying from soybeans. 1) Total export shipments of corn through the week ending Thursday, October 26 are expected to still be bearish.
2) Early commercial buying, indicated by overnight futures spread activity, supported the soybean market. 2) Early commercial buying in soybeans has a tendency to die out early, leaving the market vulnerable to increased noncommercial selling.
3) A stronger spring wheat market could continue to support winter wheat. 3) Total export shipments for all wheat are expected to still be bearish in Thursday's weekly update.

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 Corn contracts were trading higher early Thursday morning. While the overnight trading range was still small at 1 3/4 cents (Dec corn), trade volume for Dec ticked up to 13,600 contracts during the session. This could be a sign that, like Wednesday, activity increases during the day session as well. Corn harvest is slowly moving forward, keeping pressure on the futures spreads. However, the carry in the December-to-March has weakened slightly this week, sitting at 13 1/2 cents. On the bearish side, this still covers approximately 77% of calculated full commercial carry. The market isn't likely to pay much attention to weekly export sales and shipment numbers for the week ending Thursday, October 26. While sales could be big again, shipments will continue to lag what was seen last year at this same time. It's still early in the marketing year, so again these numbers shouldn't generate much interest.

SOYBEANS Soybeans continued Wednesday's rally overnight, extending gains as much as 6 cents before falling back slightly through early Thursday morning. As has been the case before, the overnight rally looks to be supported by commercial buying that recently hasn't been sustained through the following day session. Similar to corn, the market isn't likely to get overly excited about weekly export sales and shipment numbers for the week ending Thursday, October 26 set for release. Sales have been strong, are expected to stay strong, with shipments still running behind last year's pace but projecting solid demand based on 3-year averages. Technically the January contract continues to hug trendline support calculated Thursday at $9.92 1/2. Minor (short-term) resistance is at the recent high of $10.13 (October 13, ironically enough). Delivery of 50 contracts was reported against the November issue, putting the total at 147 contracts.

WHEAT The wheat complex was higher (yes, you read that right) early Thursday morning as winter contracts continue to hold above recently established lows. Chicago, given its low price, would seem ripe for noncommercial short-covering to be seen though fundamentals remain bearish long-term. If spring wheat, corn, and soybeans can rally Thursday it's possible Chicago wheat (and maybe Kansas City) could follow along behind. There isn't much change in the long-term supply and demand situation, with markets not expected to get worked up over weekly export sales and shipment numbers from the week ending Thursday, October 26. Through the previous report, all wheat shipments were running 6% behind the previous year. This number isn't expected to change much with this week's data set.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.07 $0.03 -$0.42 Dec $0.008
Soybeans: $9.06 $0.11 -$0.85 Jan $0.040
SRW Wheat: $3.81 -$0.03 -$0.37 Dec -$0.025
HRW Wheat: $3.50 $0.02 -$0.65 Dec $0.023
HRS Wheat: $5.82 $0.04 -$0.32 Dec $0.028

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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