DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was unchanged, January soybeans were 1 cent lower, and December Kansas City (HRW) wheat was 2 cents higher.

CME Globex Recap:

The grain and oilseed complex was mixed early Thursday with soybeans edging lower, corn doing what corn usually does, meaning largely nothing, and winter wheat contracts tried to recover some of Wednesday's sharp sell-off. Other commodities were mixed with canola trading lower, cotton rallying again, the energy complex mostly lower, and metals higher. The U.S. dollar index and DJIA futures were also showing gains, the latter trying to put the brakes on the recent sell-off by the Big Board.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 138.19 points (0.6%) lower at 23,271.28, the NASDAQ Composite lost 31.66 points (0.5%) to 6,706.21, and the S&P 500 fell 14.25 points (0.6%) to 2,564.62 Wednesday. DJIA futures were 53 points higher early Thursday morning. Asian markets closed mostly higher with Japan's Nikkei 225 up 322.80 points (1.5%), Hong Kong's Hang Seng gaining 167.07 points (0.6%), and China's Shanghai Composite off 3.27 points (0.1%). European markets were trading higher with London's FTSE 100 up 1.35 points, Germany's DAX rallying 72.70 points (0.6%), and France's CAC 40 adding 33.73 points (0.6%). The euro was 0.0025 lower at 1.1766 while the U.S. dollar index gained 0.06 to 93.95. December 30-year T-Bonds were 10/32 lower at 153'22 while December gold gained $0.50 to $1,278.20. Crude oil was $0.11 lower at $55.22 while Brent crude slipped $0.15 to $61.72. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

	BULL		BEAR
1)	Corn markets are priced in the low end of ranges dating back to the beginning of time, or at least the origins of the previous demand market.	1)	Given corn's old-crop ending stocks of 2.295 bb, the DTN National Corn Index (national average cash price) looks overpriced at $2.99 3/4.
2)	The middle part of this week has seen the January soybean contract rally after its near test of technical support at $9.61 1/4.	2)	Noncommercial traders in soybeans could continue to close the divergence with bearish commercial interests, aka "The Rubber-Band Principle".
3)	Since commercial selling was heavy in wheat Wednesday, it would make sense if that same group returned as buyers Thursday.	3)	Despite recent commercial buying, winter wheats' forward curves continue to show a long-term bearish fundamental situation.

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 Can you say it with me by now: December corn was fractionally higher (lower) early (weekday) morning, posting a narrow trading range (3/4 cent) on low trade volume of (7,700) contracts. Nicely done. Yes, it's true, corn did little again overnight through early Thursday morning but what will be interesting is how the market acts over the course of the day session. Will the market continue to see light commercial buying interest, as merchandisers look to secure supplies from tightly clenched hands of producers, by slowly firming basis and weaken the carry in the December-to-March futures spread? If so, could this action be enough to trigger at least a light round of noncommercial short-covering given the market's low price? Oh, and let's not forget there is week old (at least) export sales and shipment numbers set for release Thursday morning. So we have that to look forward to as well.

SOYBEANS The soybean market was relatively quiet overnight, with contracts fading lower early Thursday morning. Technically the January contract remains interesting given its near test of secondary (intermediate-term) support at $9.61 1/4 this week (the contract posted a low of $9.67 earlier this week) before rallying the last couple sessions. However the contract continues to see commercial selling, as indicated by the stronger carry in the January-to-March futures spread, that could lead to increased noncommercial long-liquidation as the latter group moves back in line with the former group and the divergence between the two weakens (for more information on this subject, see the latest Market Matters blog on DTN, "Divergence and the Rubber-Band Principle"). Weekly export sales and shipments aren't expected to give the market much of a lift given the numbers are at least a week old upon release.

WHEAT After taking another beating from commercial traders Wednesday, the wheat complex stabilized overnight. Early morning trade hints at possible renewed commercial buying in winter wheat markets, though it remains to be seen over the course of Thursday's session if that's what's actually leading to slightly weaker carry overnight or it's simply a result of low volume trade. Regardless, December contracts for both Chicago and Kansas City remain mired near recent lows. Weekly export sales and shipment numbers (for the week ending Thursday, November 9) aren't expected to improve the mood much.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.00	$0.01	-$0.38	Dec	$0.004
Soybeans:	$8.98	$0.09	-$0.78	Jan	$0.007
SRW Wheat:	$3.86	-$0.08	-$0.34	Dec	-$0.004
HRW Wheat:	$3.63	-$0.09	-$0.55	Dec	$0.012
HRS Wheat:	$5.97	-$0.04	-$0.27	Dec	$0.002

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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