DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was 1 cent lower, January soybeans were 2 cents lower, and December Chicago (SRW) wheat was 3 cents lower.

CME Globex Recap:

We are all aware of the routine by now. Whatever happens Monday seems to send markets in the opposite direction overnight into early Tuesday morning. Such is the case again this week with grains, energies, and metals all lower following Monday's rally. The U.S. dollar index and DJIA futures are stronger to start the day.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 9.23 points higher at 23,548.42, the NASDAQ Composite gained 22.00 points (0.3%) to 6,784.44, and the S&P 500 added 3.29 points (0.1%) to 2,591.13 Monday. DJIA futures were 27 point higher early Tuesday morning. Asian markets closed mostly higher with Japan's Nikkei 225 up 389.25 points (1.7%), Hong Kong's Hang Seng gaining 397.54 points (1.4%), and China's Shanghai Composite rallying 25.40 points (0.8%). European markets were trading mostly lower with London's FTSE 100 down 13.27 points (0.2%), Germany's DAX up 6.59 points, and France's CAC 40 off 7.27 points (0.1%). The euro was 0.0044 lower at 1.1566 while the U.S. dollar index added 0.33 to 95.07. December 30-year T-Bonds were 4/32 lower at 154'03 while December gold fell $4.50 to $1,277.10. Crude oil was $0.03 lower at $57.32 while Brent crude slipped $0.19 to $64.08. China's Dalian soybean futures were higher and Malaysian palm oil futures were mostly lower overnight.

	BULL		BEAR
1)	The most bullish aspect of Dec corn Tuesday morning was that it was within a penny of its overnight session high.	1)	Regarding Dec corn, of course that meant it was sitting on its overnight session low early Tuesday morning.
2)	Technical indicators continue to hint at a potential bullish breakout coming in January soybeans.	2)	Newsom's Market Rule #4 tells us soybeans are most likely headed lower, with a vacuum underneath both futures and cash.
3)	Technically, it could be argued that winter wheat contracts continue to build a potential uptrend on weekly charts.	3)	It's winter wheat. It's still bearish.

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 continued its slow grind lower, following through on Monday's slightly bearish close by failing to tick above unchanged during the overnight session. Not that widespread selling was seen either, with Dec corn's trading range through early Tuesday morning only 3/4 cent. The bottom line in corn markets, both futures and cash, is that it's I no hurry to get anywhere fast. Tuesday's session is expected to be more of the same, particularly with another useless USDA round of Supply and Demand reports on the horizon (set for release Thursday, November 9). For now the commercial view remains bearish, as indicated by the strong carry in both the December-to-March and March-to-May futures spreads. However, national average basis is starting to firm slightly with the DTN National Corn Index (NCI.X, national average cash price) calculated at 77 1/4 cents under the September 2018 futures contract last Friday. This was 2 3/4 cents stronger than the previous Friday, but still well below the 4-year average of 61 1/2 cents under.

SOYBEANS One can say this for the January soybean contract, it's squeezing every tick out of the wedge on its weekly chart. This week saw trendline resistance calculated at $10.00 1/4 and trendline support at $9.90. The range so far this week, through early Tuesday morning, is $9.97 to $9.85. While technical indicators show the next move should be up, the contract continues to struggle finding buying interest. And according to Newsom's Market Rule #4: A market that can't go up (or down) won't go up (or down). That leaves Jan soybeans, as well as the DTN National Soybean Index (NSI.X, national average cash price) in the precarious position of having little support, or a vacuum, underneath if selling starts to intensify. Add in the strong carry of the January-to-March futures spread and weak basis (calculated at 84 1/4 cents under the January future Friday evening) and markets seem more vulnerable. Delivery of 33 contracts was reported against the November issue, putting the total at 280 contracts.

WHEAT How does winter wheat normally respond to a Monday rally? If you guessed, "By selling off on Tuesday", you would be correct. And that's exactly what we see as the day gets under way with both Chicago and Kansas City contracts coming under pressure. As discussed Monday afternoon, the most interesting aspect of Tuesday's trade could be spread activity given Monday's close. Then we saw a weaker carry that could've been the result of late commercial buying or contracts closing out of line due to low trade volume. Tuesday's reaction would tell the tale, with little change in spreads seen overnight. It's also possible, given the losses through early Tuesday morning, that winter wheat erases Monday's activity altogether.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.07	-$0.02	-$0.41	Dec	$0.004
Soybeans:	$9.03	-$0.12	-$0.84	Jan	$0.005
SRW Wheat:	$3.91	$0.00	-$0.35	Dec	$0.000
HRW Wheat:	$3.66	$0.02	-$0.61	Dec	$0.010
HRS Wheat:	$5.94	$0.04	-$0.31	Dec	$0.021

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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