DTN Early Word Grains

Autumn is Over...

6:00 a.m. CME Globex:

March corn was 1 cent lower, January soybeans were 1 cent lower, and March Chicago (SRW) was 3 cents lower.

CME Globex Recap:

According to the calendar, the end of November is the end of fall, making Thursday the last day of autumn. Fittingly, given what has been seen in the grain and oilseed complex the last three months, the complex was quietly lower overnight. Meanwhile, outside markets were mostly higher as buyers came back to the energy complex. The U.S. dollar index and DJIA futures both continued to rally overnight, the latter hinting at another strong move by the Big Board when it opens Thursday morning.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 103.97 points (0.4%) higher at 23,940.68, the NASDAQ Composite lost 87.97 points (1.3%) to 6,824.39, and the S&P 500 slipped 0.97 point to 2,626.07 Wednesday. DJIA futures were 88 points higher early Thursday morning. Asian markets closed mostly lower with Japan's Nikkei 225 up 127.76 points (0.6%), Hong Kong's Hang Seng down 446.18 points (1.5%), and China's Shanghai Composite off 20.67 points (0.6%). European markets were trading mostly higher with London's FTSE 100 up 16.95 points (0.2%), Germany's DAX gaining 96.40 points (0.7%), and France's CAC 40 adding 25.78 points (0.5%). The euro lost 0.0022 to 1.1828 as the U.S. dollar index gained 0.14 to 93.40. March 30-year T-Bonds were 6/32 lower at 152'00 while February gold lost $1.80 to $1,284.30. Crude oil was $0.50 higher at $57.80 while Brent crude added $0.98 to $64.09. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.

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BULL BEAR
1) Corn could see a round of noncommercial short-covering to close out the month. 1) Total marketing year shipments of corn are expected to still be well behind last year's pace when USDA's weekly update is released Thursday.
2) It's possible soybeans could try to build some short-term bullish momentum on daily charts. 2) The last day of the month could see noncommercial long-liquidation in soybeans.
3) March Chicago wheat has rallied 12 cents of its new contract low posted this past Monday. 3) If commercial selling returns to wheat, contracts could quickly test new lows recently established.

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 Say hello to the March corn contract, as it will be your guide through the winter months. So there's no confusion between it and its predecessor, the more well-known December issue, March is kind enough to take over while sitting in a minor (short-term) sideways trading range between its contract low of $3.48 3/4 and $3.58. Fundamentally the March offers nothing different than the December did, with the March-to-May futures spread showing a carry of 8 1/4 cents, or 69% of calculated full commercial carry. The December ended its pre-delivery term priced at $3.39, a price that now becomes the target for March according to the Down Escalator Principle common with an oversupplied market. Initial delivery of 1,204 contracts was reported against the December contract.

SOYBEANS January soybeans continue to consolidate within this week's range between Monday's high of $10.01 1/2 and Tuesday's low of $9.87 1/4. Early Thursday morning finds the market in general fractionally lower, possibly pressured by spillover selling from China's Dalian soybean market. Fundamentally there is no reason to get excited about the market yet, with the carry in the January-to-March at 12 cents and covering nearly 79% of calculated full commercial carry. The March-to-May spread at a carry of 10 1/2 cents has also crept into bearish territory covering 68% of calculated full commercial carry. Soybeans are vulnerable to a round of end-of-the-month long-liquidation given that noncommercial traders continue to hold a net-long futures position.

WHEAT Winter wheat markets were quietly mixed early Thursday with March Chicago down a couple cents and March Kansas City sitting near unchanged. Possibly the most interesting aspect of Chicago wheat as we close out fall Thursday will be the activity of commercial traders. The last two sessions have seen this group come in as buyers, rallying the March contract off its new low of $4.24 1/4 to an overnight high of $4.36 1/4. If commercial selling returns, at overnight spread activity would suggest it will, March Chicago could quickly fall back to test its new low. Initial delivery of 2,000 contracts was reported against the December Chicago issue, and 55 contracts against the December Kansas City.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.07 $0.04 -$0.47 Mar $0.006
Soybeans: $9.19 $0.00 -$0.74 Jan $0.001
SRW Wheat: $3.88 $0.07 -$0.47 Mar $0.016
HRW Wheat: $3.66 $0.06 -$0.66 Mar $0.021
HRS Wheat: $5.89 $0.05 -$0.35 Mar $0.038

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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