DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

March corn was 2 cents lower, January soybeans were 4 cents lower, and March Chicago (SRW) was unchanged.

CME Globex Recap:

Similar to 24 hours ago, most of the electronic markets are lower early Tuesday morning. The exceptions are winter wheat, soybean oil, canola, and natural gas. The U.S. dollar index was up slightly, though commodities seem to be in a funk regardless of how the dollar moves. DJIA futures were also higher, pointing to continued buying when the Big Board opens.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 22.79 points (0.1%) higher at 23,580.78, the NASDAQ Composite lost 10.64 points (0.1%) to 6,878.52, and the S&P 500 fell 1.00 point to 2,601.42 Monday. DJIA futures were 31 points higher early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 off 9.75 points, Hong Kong's Hang Seng down 5.34 points, and China's Shanghai Composite gaining 11.43 points (0.3%). European markets were trading mostly higher with London's FTSE 100 up 42.35 points (0.5%), Germany's DAX gaining 51.78 points (0.4%), and France's CAC 40 rallying 30.51 points (0.6%). The euro gained 0.0009 to 1.1909 as the U.S. dollar index added 0.13 to 93.03. December 30-year T-Bonds were 4/32 lower at 154'07 while December gold lost $1.40 to $1,293.00. Crude oil was $0.54 lower at $57.57 while Brent crude slipped $0.59 to $63.25. China's Dalian soybean and Malaysian palm oil futures were both lower again overnight.

	BULL		BEAR
1)	The latest CFTC Commitment of Traders report showed noncommercial interests still holding a large net-short corn futures position.	1)	Corn's forward curve continues to grow more bearish long-term.
2)	Jan soybeans continue to indicate bullish momentum on its daily chart.	2)	The carry in the January-to-March soybean futures spread continues to strengthen, reflecting a more bearish short-term commercial view.
3)	Maybe Monday's move to new contract lows in wheat was nothing more than a classic head-fake.	3)	Then again, maybe not (wheat).

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 As the sun gets ready to set on our old friend December 2017 corn, we see it too is poised to sink below the horizon of its previous contract low. Early Tuesday morning finds Dec corn sitting at $3.37, the overnight session low and fractions from its contract low of $3.36 1/4. March corn is looking much better, holding a 1/2 cent off its session low of $3.49 3/4 which is only a penny away from the contract low. While whispers of weather woes regarding Argentina's corn have been heard on the wind, nothing has sparked buying interest in corn to this point. While a large noncommercial net-short futures position remains a potentially bullish factor, the market's increasingly bearish 2017-2018 forward curve reflects the weight of year five of record production, this time with seemingly slowing demand. As we get deeper into the post-harvest off-season, this weight is likely to easily offset rounds of noncommercial short-covering.

SOYBEANS The soybean market was unimpressive overnight with contracts sitting near session lows early Tuesday morning. Jan beans continue to show a sideways trend on weekly and monthly charts, while its daily chart is a bit more difficult to read. The contract has tried to rally, only to fall back from session highs almost daily. Still, it sits well above its recent low of $9.67, poking its head back above $10 during Monday's early rally. Fundamentally the market is growing more bearish as the carry in the January-to-March spread continues to strengthen. Overnight trade shows this carry at 12 cents, though prices of both contracts could be skewed by low trade volume. Keep an eye on this spread as Tuesday's session progresses, as well as activity in the deferred spreads. For now both the March-to-May and May-to-July are covering a neutral level of calculated full commercial carry.

WHEAT Winter wheat contracts were fractionally higher after being hit hard during Monday's sell-off. New contract lows were seen almost across the board, the most telling being those seen in new-crop July 2018 contracts for both Chicago (SRW) and Kansas City (HRW). Turning our attention to the long-term monthly charts we see Chicago sitting below support at $4.31, though the situation could be worse if the chart hadn't rolled from the December ($4.09) to the March ($4.28). Still, the fact that there is a 19-cent carry in the nearby futures spread says it all: Wheat fundamentals remain extremely bearish and should limit attempts at rallying this winter.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.04	-$0.03	-$0.35	Dec	$0.007
Soybeans:	$9.22	$0.04	-$0.74	Jan	$0.009
SRW Wheat:	$3.78	-$0.05	-$0.31	Dec	$0.009
HRW Wheat:	$3.56	-$0.05	-$0.51	Dec	$0.025
HRS Wheat:	$5.88	-$0.10	-$0.22	Dec	$0.034

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

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

(BAS)

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