DTN Early Word Grains
Stop Me if You've Heard This One
December corn was 1 cent lower, January soybeans were 2 cents higher, and December Chicago (SRW) wheat was 2 cents lower.
CME Globex Recap:Three markets walk into a gym. One slowly starts using the stair-climber, looking like it's going up but in reality staying still. One tries the wall climb, but can't get past the first rock. And one lays down on the floor and goes to sleep. There's your overnight recap for the soybean, wheat, and corn markets respectively. Outside markets weren't much more interesting with light selling seen in energies and light buying in metals. Cotton tried to recover some of Tuesday's commercial-led sell-off.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 8.81 points higher at 23,557.23, the NASDAQ Composite lost 18.65 points (0.3%) to 6,767.78, and the S&P 500 slipped 0.49 to 2,590.64 Tuesday. DJIA futures were 7 points lower early Wednesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 off 23.78 points (0.1%), Hong Kong's Hang Seng down 86.74 points (0.3%), and China's Shanghai Composite rallying 1.89 points. European markets were trading mostly lower with London's FTSE 100 off 0.19, Germany's DAX down 12.85 points (0.1%), and France's CAC 40 down 16.31 points (0.3%). The euro was 0.0016 higher at 1.1603 while the U.S. dollar index dipped 0.02 to 94.82. December 30-year T-Bonds were 1/32 lower at 154'21 while December gold gained $5.40 to $1,281.10. Crude oil was $0.18 lower at $57.02 while Brent crude slipped $0.11 to $63.58. China's Dalian soybean futures were mixed and Malaysian palm oil futures were higher overnight.
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| 1) | The DTN National Corn Index (NCI.X, national average cash price) is priced in the lower 5% of its distribution range dating back to September 2006. | 1) | Despite its low intrinsic value (cash price), corn is struggling to find buying interest from either commercial or noncommercial traders. |
| 2) | January soybeans are nearing a potential bullish breakout of a consolidation pattern on its weekly chart. | 2) | The carry in the January-to-March soybean futures spread continues to cover a bearish level of calculated full commercial carry. |
| 3) | Something bullish about wheat? I'll get back to you. | 3) | Something bearish for wheat? Pick a card, any card for they're all bearish. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN First, December corn actually saw an uptick in trade volume Tuesday while posting a combined (overnight and day session) trading range of around two cents. Given that, from a technical perspective, the fractionally lower close would not be viewed as bullish. At this point though most analysts are really struggling to find something new to say about corn. Overnight trade saw contracts slip a little, again, with Dec showing trade volume of 7,500 contracts. So far both futures and cash markets are ignoring normal seasonal tendencies to work higher, pressured by consistent commercial selling indicated by stronger carry in the futures spreads and continued weak basis. Until either commercial or noncommercial traders view corn as underpriced, something that will be difficult given this past September's quarterly stocks figure of 2.295 bb, the market will likely continue its slow grind lower.
SOYBEANS As discussed before in this space, many time, January soybeans are running out of room between the converging trendlines on its weekly chart. This week has trendline resistance at $10.00 1/4, trendline support at $9.90. The contract has posted a range this week of $9.98 3/4 to $9.85, sitting at $9.98 early Wednesday morning. While technical momentum indicators continue to show an upside breakout is more likely, the market would benefit from increased commercial buying interest. As it is now, noncommercial traders would be expected to add to their net-long futures position (CFTC Commitment of Traders report, legacy, futures only) while commercial traders remain short-term bearish. Keep an eye on action in futures spreads as Wednesday progresses to see if the commercial side starts to provide support as well. If not, the small overnight rally won't likely hold through the day. Delivery of 133 contracts was reported against the November issue, putting the total at 413 contracts.
WHEAT Winter wheat contracts were lower again early Wednesday morning, the recent rally looking more like a failed attempt to establish an uptrend. Renewed commercial selling continues to pressure both Chicago and Kansas City, with quiet overnight trade showing the carry in the Chicago December-to-March futures spread strengthening again. If this selling starts to gain momentum it would not be surprising to see December contracts of both markets take out last Tuesday's new lows of $4.16 1/4 (Chicago) and $4.16 1/2.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.07 | -$0.01 | -$0.41 | Dec | -$0.003 |
| Soybeans: | $9.13 | $0.03 | -$0.83 | Jan | $0.005 |
| SRW Wheat: | $3.92 | -$0.03 | -$0.35 | Dec | $0.002 |
| HRW Wheat: | $3.65 | -$0.04 | -$0.61 | Dec | -$0.008 |
| HRS Wheat: | $6.03 | $0.04 | -$0.32 | Dec | $0.000 |
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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