DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

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

CME Globex Recap:

It's a cold morning across the U.S. Midwest, both temperature-wise and in regards to markets as corn threatened a move to a new low overnight. Soybeans and wheat were also under pressure as the grain and oilseed complex continues to react to Thursday's USDA reports, particularly the extremely bearish set of corn numbers. Other commodity sectors were mostly higher, with only gold lower despite a slightly weaker U.S. dollar Friday morning. DJIA futures were also down, indicating continued selling when the Big Board opens.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 101.42 points (0.4%) lower at 23,461.94, the NASDAQ Composite lost 39.07 points (0.6%) to 6,750.05, and the S&P 500 fell 9.76 points (0.4%) to 2,584.62 Thursday. DJIA futures were 44 points lower early Friday morning. Asian markets closed mostly lower with Japan's Nikkei 225 down 187.29 points (0.8%), Hong Kong's Hang Seng off 15.65 points, and China's Shanghai Composite adding 4.88 points (0.1%). European markets were trading lower with London's FTSE 100 down 22.34 points (0.3%), Germany's DAX off 17.99 points (0.1%), and France's CAC 40 losing 19.68 points (0.4%). The euro was unchanged at 1.1642 while the U.S. dollar index lost 0.05 to 94.48. December 30-year T-Bonds were 34/32 lower at 152'26 while December gold dipped $2.90 to $1,284.60. Crude oil was $0.04 lower at $57.13 while Brent crude gained $0.07 to $64.00. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.

	BULL		BEAR
1)	Noncommercial traders holding net-short futures in corn could look to cover some of that position heading into the weekend.	1)	Corn futures fell to a new 4-month low during Thursday's sell-off, a bearish long-term trend signal.
2)	The long-term forward curve in soybeans is not bearish.	2)	After an attempted bullish breakout in soybeans failed Thursday the January contract is in position to confirm a bearish breakout.
3)	Commercial buying continues to be seen in the wheat complex.	3)	Forward curves for both Chicago and Kansas City wheat remain 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 December corn challenged Thursday's post-report low of $3.40 3/4 overnight, showing increased trade volume (futures only) of 39,100 contracts while posting a trading range of only 1 cent. Thursday's sell-off added weight, in the form of nearly 2.5 bb of ending stocks for 2017-2018 (projected), to corn's short-term, intermediate-term, and long-term trends. The latter could be the most problematic for those still holding cash corn, with this month's low (so far) of $3.41 a new 4-month low. Next support on the monthly chart is $3.39, a price that marks the 76.4% retracement level of the rally from the August 2016 low of $3.14 3/4 through the July 2017 high of $4.17 1/4.

SOYBEANS Soybean contracts were fractionally lower early Friday morning, taking a breather after Thursday's post-USDA report sell-off. While there wasn't anything overly bearish in the numbers for soybeans, there also wasn't anything bullish. Therefore, it opened the door for both commercial and noncommercial selling. After failing to move to a new 4-week high beyond $10.13 Thursday, Jan beans are now in position to post a new 4-week low below $9.81. This would confirm the bearish breakout of large wedge pattern on its weekly chart, signaling a contra-seasonal downtrend is in the making. Fundamentally the market needs to see the return of commercial buying if it wants to have a chance of holding together. If this group continues to sell Friday, and the old 4-week low is breached, the downside breakout could quickly gain momentum. Delivery of 130 contracts was reported against the November issue, putting the total at 676 contracts.

WHEAT The wheat complex was lower early Friday, more in sympathy with the rest of the grain and oilseed complex than any new fundamental reason. While Thursday's report was more curious than bullish for all wheat, given the 25 mb increase in USDA's export demand projection despite a lagging export shipment pace, solid commercial selling emerged post-report. This kept uptrends in place on weekly close-only charts for futures spreads, indicating wheat markets continue to grow less bearish. Note that "less bearish" is still bearish, but the fundamental situation has improved in the eyes of the commercial side of the markets. Chicago and Kansas City traders are likely sitting back, waiting for January's round of reports that include winter wheat acres, expecting a decrease from last year's near 100-year low seeded area. Friday's session is expected to hold few fireworks, though spillover selling from other grains could put pressure on markets.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.02	-$0.06	-$0.40	Dec	$0.005
Soybeans:	$9.04	-$0.12	-$0.81	Jan	$0.017
SRW Wheat:	$3.94	$0.03	-$0.35	Dec	$0.005
HRW Wheat:	$3.70	$0.03	-$0.59	Dec	$0.012
HRS Wheat:	$6.19	$0.06	-$0.29	Dec	$0.014

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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