DTN Early Word Grains

Feeling Green

6:00 a.m. CME Globex:

December corn was fractionally higher, January soybeans were 4 cents higher, and December Chicago (SRW) wheat was unchanged.

CME Globex Recap:

The grain and oilseed complex was trading higher, led by a strengthening uptrend in Minneapolis spring wheat and a near bullish breakout by soybeans. Corn and winter wheat were fractionally higher, par for the early morning course. From a technical point of view the overnight moves could be significant, though occurring before USDA's next round of imaginary numbers set for release at 11 am (CT) the overnight session could also be completely irrelevant. Other commodity sectors were trading mostly higher early Thursday morning.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 6.13 points higher at 23,563.36, the NASDAQ Composite gained 21.34 points (0.3%) to 6,789.12, and the S&P 500 added 3.74 points (0.1%) to 2,594.38 Wednesday. DJIA futures were 31 points lower early Thursday morning. Asian markets closed mostly higher with Japan's Nikkei 225 down 45.11 points (0.2%), Hong Kong's Hang Seng up 228.97 points (0.8%), and China's Shanghai Composite gaining 12.33 points (0.4%). European markets were trading mostly lower with London's FTSE 100 down 1.42 points, Germany's DAX off 28.13 points (0.2%), and France's CAC 40 losing 7.99 points (0.1%). The euro was 0.0013 higher at 1.1608 while the U.S. dollar index lost 0.13 to 94.75. December 30-year T-Bonds were 7/32 lower at 154'04 while December gold gained $2.20 to $1,285.90. Crude oil was $0.21 higher at $57.02 while Brent crude rallied $0.26 to $63.75. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

BULL BEAR
1) There are a number of bullish factors in the corn market including low price, seasonality, and a noncommercial net-short futures position heading into Thursday's round of monthly USDA imaginary numbers. 1) The strong carry in corn's forward curve indicates the commercial side of the market's conviction that supply and demand is bearish.
2) January soybeans are in position for a bullish breakout of a large consolidation pattern on its weekly chart. 2) Soybeans could have a difficult time extending a potential bullish breakout given the strong carry of the January-to-March futures spread.
3) Strong commercial buying in Minneapolis spring wheat is helping that market gain bullish momentum (Soybeans, are you listening?). 3) Forward curves for both Chicago and Kansas City wheat remain extremely bearish long-term.

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 In discussing corn heading into USDA's November round of imaginary numbers, it's safe to say "All quiet on the western front." A look at weekly chart for the December contract shows a classic sideways trending market above the low of $3.42 1/2 and below the most recent high of $3.55 1/4. Will USDA's next hallucinogenic dream be enough to break the contract out of this rut? Or will Dec corn move into delivery later this month still hunkered down in this trench? A look at pre-report guesses would suggest the latter is likely with production expected to come in about 40 mb above USDA's October guess of 14.280 bb. Meanwhile, the most imaginary number of all (2017-2018 ending stocks) were guessed at 2.360 bb, up slightly from USDA's October estimation of 2.340 bb. If USDA's latest guesses are anywhere close to these pre-report prognostications, the market could remain lifeless. However, given the noncommercial net-short futures position heading into this set of reports a quick round of short-covering can't be ruled out.

SOYBEANS For January soybeans it's another day, and another day closer to a breakout of some sort of the giant wedge on its weekly chart (for more information see DTN's Technically Speaking blog post from Friday, November 3). Overnight trade saw the contract press trendline resistance calculated this week at $10.00 1/4 with Jan beans posting a high of $10.02 1/4. A more significant bullish signal would be the establishment of a new 4-week high above $10.13, a move that remains possible depending on USDA's November round of imaginary numbers set for release late Thursday morning. Technical momentum would suggest more upside is possible, meaning USDA could lower 2017-2018 production and/or ending stocks more than indicated by average pre-report guesses. Regardless of USDA's monthly nonsense, the soybean market needs to see increased commercial buying indicated by weaker carry in the January-to-March futures spread to support a potential bullish breakout. Delivery of 133 contracts was reported against the November issue, putting the total at 546 contracts.

WHEAT The wheat complex was being pulled higher by continued strong commercial buying in the Minneapolis spring market. There the recently established uptrend on weekly charts is quickly gaining momentum, supported by solid commercial buying interest (soybean market watchers take notes). This support helped the December contract trade as much as 14 1/2 cents higher during the overnight session. Similar enthusiasm was lacking in winter wheat, where contracts that were showing green as I started this morning commentary had slipped back to fractional losses. USDA's next round of imaginary numbers aren't expected to wheat any bullish favors with average pre-report prognostications showing U.S. ending stocks could hold near unchanged from October.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.08 $0.01 -$0.40 Dec $0.003
Soybeans: $9.16 $0.03 -$0.82 Jan $0.006
SRW Wheat: $3.92 $0.00 -$0.35 Dec $0.000
HRW Wheat: $3.68 $0.02 -$0.60 Dec $0.012
HRS Wheat: $6.13 $0.10 -$0.30 Dec $0.013

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

(BAS)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]