DTN Early Word Grains
It's a Bloody Monday
December corn was fractionally lower, January soybeans were 6 cents lower, and December Chicago (SRW) wheat was 4 cents lower.
CME Globex Recap:Regarding the title of this morning's commentary, you read with either an American meaning (commodity markets all in the red) or with a British dialect (bloody as a word to express annoyance or emphasis). The grain and oilseed complex showed little interest overnight in follow-through buying from Friday, led by soybeans. Wheat also took a hit while corn drifted lower. Most other commodities also struggled, with only cotton showing a small gain Monday morning. The U.S. dollar index was higher, but also well off its session high to start the day.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 100.12 points (0.4%) lower at 23,358.24, the NASDAQ Composite lost 10.50 points (0.2%) to 6,782.79, and the S&P 500 fell 6.79 points (0.3%) to 2,578.85 Friday. DJIA futures were 10 points lower early Monday morning. Asian markets closed mixed with Japan's Nikkei 225 down 134.04 points (0.6%), Hong Kong's Hang Seng gaining 61.27 points (0.2%), and China's Shanghai Composite up 9.49 points (0.3%). European markets were trading mostly higher with London's FTSE 100 off 1.08 points, Germany's DAX rallying 26.05 points, and France's CAC 40 adding 13.55 points (0.2%). The euro was 0.0005 lower at 1.1787 while the U.S. dollar index gained 0.07 to 93.74 after posting a high of 94.04 overnight. December 30-year T-Bonds were 10/32 higher at 154'03 while December gold fell $5.30 to $1,291.20. Crude oil was $0.20 lower at $56.35 while Brent crude lost $0.56 to $62.16. China's Dalian soybean futures were near higher and Malaysian palm oil futures were lower overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | Noncommercial short-covering could provide support to corn heading into this holiday shortened week. | 1) | Recent commercial buying in corn is sourcing short-term supplies only. Long-term the market has bearish fundamentals to deal with. |
| 2) | Soybean deferred futures spreads continue to reflect a neutral view of supply and demand, as opposed to the bearish short-term view. | 2) | Short-term commercial selling continues to pressure the soybean market, and could lead to increased noncommercial long-liquidation. |
| 3) | With Chicago wheat near its recent lows, noncommercial traders could look to cover some short futures positions. | 3) | Look for commercial selling to reemerge in winter wheat, most notably Chicago, Monday. |
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 COMMENTSCORN The corn market was quietly lower overnight, with Dec showing a fractional loss. Technically the contract continues to find resistance at old support near $3.44 1/4, posting a high of $3.44 on November 13 and $3.43 1/2 last Friday. In between, the contract fell to a new low of $3.36 1/4 last Thursday. Key to the market will be the activity of its two key participants during this chopped up holiday week. Recent spread and basis activity shows commercial traders have been providing support while noncommercial traders have been putting pressure on the market. Last Friday's CFTC Commitments of Traders report (legacy, futures only) showed the latter group holding a net-short futures position of 125,133 contracts, the largest net-short position since 131,792 the week of October 22, 2013. This could be considered a bullish factor if these traders start to cover heading into the holiday season. National average basis firmed by 2 1/2 cents last week, calculated Friday afternoon at 37 1/4 cents under (DTN National Corn Index minus December futures).
SOYBEANS Soybean contracts were solidly lower early Monday morning, erasing roughly 1/3 of last Friday's 18-cent rally. As expected then, noncommercial traders are likely to view any rally as an opportunity to liquidate apportion of their net-long futures position, reported last Friday by the CFTC (legacy Commitment of Traders report, futures only) to still be 51,887 contracts (as of Tuesday, November 14). Given that commercial selling has been prevalent the last number of weeks, as indicated by the strengthening carry in the January-to-March futures spread, noncommercial traders could be uncomfortable holding a net-log futures position, short-term, heading into a disjointed holiday week. However national average basis firmed by approximately 2 1/2 cents last week, calculated at 77 1/4 cents under (DTN National Soybean Index minus January futures) Friday afternoon.
WHEAT The wheat complex was lower early Monday morning, led by selling in winter markets. Given the recent back-and-forth of commercial activity in the Chicago (SRW) market, and the solid commercial buying seen last Friday, it would not be surprising to see commercial selling emerge as Monday progresses. According to last Friday's CFTC Commitment of Traders report (legacy, futures only) noncommercial traders held a net-short futures position of 56,771 contracts (as of Tuesday, November 14), 12,275 contracts less than the previous week. With both Chicago and Kansas City holding near recent lows, this group could continue to provide support by light short-covering activity.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.06 | $0.07 | -$0.37 | Dec | $0.009 |
| Soybeans: | $9.13 | $0.18 | -$0.77 | Jan | -$0.004 |
| SRW Wheat: | $3.94 | $0.06 | -$0.33 | Dec | $0.002 |
| HRW Wheat: | $3.68 | $0.05 | -$0.54 | Dec | $0.004 |
| HRS Wheat: | $6.08 | $0.05 | -$0.27 | Dec | $0.001 |
Darin Newsom can be reached at darin.newsom@dtn.com
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