DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

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

CME Globex Recap:

Monday's action in soybeans left open the possibility of an Island Top formation on its daily chart. However, with contracts fractionally mixed overnight no such patter was established. Corn was fractionally higher after posting less than a 1-cent trading range while wheat contracts were lower again. Most outside commodities were also under pressure as the U.S. dollar index posted a small gain. DJIA futures were higher, but nothing like the triple-digit gains seen early Monday morning.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 58.46 points (0.2%) higher at 24,290.05, the NASDAQ Composite lost 72.22 points (1.0%) to 6,775.37, and the S&P 500 fell 2.78 points (0.1%) to 2,639.44 Monday. DJIA futures were 29 points higher early Tuesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 down 84.78 points (0.4%), Hong Kong's Hang Seng off 295.48 points (1.0%), and China's Shanghai Composite losing 5.94 points (0.2%). European markets were trading lower with London's FTSE 100 off 0.87 point, Germany's DAX losing 91.23 points (0.7%), and France's CAC 40 off 37.66 points (0.77%). The euro added 0.0002 to 1.1866 as the U.S. dollar index gained 0.03 to 93.12. March 30-year T-Bonds were 1/32 lower at 153'00 while February gold rallied $1.40 to $1,279.10. Crude oil was $0.27 lower at $57.20 while Brent crude slipped $0.13 to $62.32. China's Dalian soybean and Malaysian palm oil futures were both lower overnight.

	BULL		BEAR
1)	Since the corn market closed lower Monday, it's possible contracts could see a small rally Tuesday.	1)	The corn market is in a solid "sell rallies" frame of mind.
2)	January soybeans did not establish and Island Top reversal pattern overnight.	2)	Though January soybeans didn't establish a reversal pattern overnight, the contract is still in position for that possibility Tuesday night into Wednesday.
3)	Similar to corn, Monday's lower close in wheat could bring light buying interest Tuesday.	3)	The 20-day moving average continues to create resistance in Chicago 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 Let's just say March corn was within fractions of its overnight high early Tuesday morning. On the other hand, if one wants to be bearish, we could also say March corn was within fractions of its overnight low. That's because the contract hadn't posted a full penny trading range since opening Monday night. As one would expect, overnight volume (futures only) was light at only 7,200 contracts. What's in store (the theme of the day, for those of you attending the annual DTN/The Progressive Farmer Ag Summit) for corn Tuesday? Given Monday's sell-off it's possible some Turnaround Tuesday activity could be seen. However, from a technical point of view March corn established a bearish range before closing lower Monday, hinting at quiet follow-through selling. Either way, don't look for the market to get overly excited until after DTN'S annual market outlook is released later Tuesday morning (sarcasm). Delivery of another 1,122 contracts was reported against the December issue, putting the total at 4,882 contracts.

SOYBEANS Monday's market action left January soybeans in position for a possible Island Top pattern overnight into Tuesday morning. While no such pattern was established, the contract isn't out of the bear-infested water yet (for more information on this pattern, see DTN's Technically Speaking blog). Overnight trade saw soybeans do little actually, with trade volume (futures only) for January registering only 8,200 contracts changing hands. As discussed before in this space, key to this week's trade is movement of futures spreads with carry in the market's forward curve still bearish. Similar divergence (futures trending up, spreads trending down) has been seen in soybean meal, though there spreads are trending sideways rather than down. If soybeans trade quietly Tuesday, contracts could still be in position to post a top formation Tuesday night.

WHEAT March Chicago wheat's 20-day moving average continues to prove a tough liner to break. Monday's market action saw the contract push to a high of $4.43, well beyond the calculated 20-day moving average of $4.39 1/2, only to eventually prove unable to puncture this resistance as the contract closed at $4.35 1/4. Resistance is calculated Tuesday at $4.38 3/4. In general there is little fresh fundamental news to get the winter wheat market excited, though temperatures across the U.S. Southern Plains and Midwest are turning more seasonal. Look for the market to post a quieter session than what was seen Monday. Delivery of another 247 contracts was reported against the December Chicago issue, putting its total at 4,204 contracts. Delivery of another 12 contracts was reported against the December Kansas City issue, putting its total at 650 contracts.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.11	-$0.04	-$0.43	Mar	$0.012
Soybeans:	$9.25	$0.04	-$0.73	Jan	-$0.005
SRW Wheat:	$3.94	-$0.02	-$0.41	Mar	$0.008
HRW Wheat:	$3.74	$0.03	-$0.60	Mar	$0.067
HRS Wheat:	$5.99	-$0.01	-$0.30	Mar	$0.016

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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