DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

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

CME Globex Recap:

Though the last two day sessions have seen soybeans fall back from highs at the close, the market rallied again overnight. Spillover buying provided support to corn and spring wheat while winter wheat markets drifted lower. Other commodity sectors were under mixed with softs mostly lower (cotton was higher), energies were lower, and metals were higher early Wednesday. Both the U.S. dollar and DJIA futures were lower overnight, the latter following-through on the Big Board's triple-digit sell-off from Tuesday.

OUTSIDE MARKETS:

Though the last two day sessions have seen soybeans fall back from highs at the close, the market rallied again overnight. Spillover buying provided support to corn and spring wheat while winter wheat markets drifted lower. Other commodity sectors were under mixed with softs mostly lower (cotton was higher), energies were lower, and metals were higher early Wednesday. Both the U.S. dollar and DJIA futures were lower overnight, the latter following-through on the Big Board's triple-digit sell-off from Tuesday.

	BULL		BEAR
1)	Spillover buying from soybeans could continue to support corn Wednesday.	1)	Sellers seem to be waiting for March corn to crawl to the upper end of its sideways trading range before knocking it down again.
2)	January soybeans have rallied above the previous high on its weekly chart, and still are not considered in a technically overbought situation.	2)	The January-to-March soybean spread is in a solid downtrend (strengthening carry).
3)	July Kansas City wheat continues to hold near support levels.	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 March corn continues to chug along in its minor (short-term) sideways trend between $3.48 3/4 and $3.60 1/2, with the midpoint near $3.54 1/2. Early Wednesday morning finds the contract priced at $3.55 1/2. Fundamentally the market has seen renewed commercial selling this week (so far) with the carry in the March-to-May spread strengthening to 8 1/2 cents. The May-to-July as crawled back out to a carry of 8 1/4 cents, with both spreads covering greater than 70% of calculated full commercial carry. Wednesday is often a session of decreased volume and increased volatility. However, overnight trade actually saw volume (futures only) pick up to 11,600 contracts so Wednesday's session could be more active in general. Delivery of another 1,127 contracts was reported against the December issue, putting the total at 6,009 contracts.

SOYBEANS January soybeans finally moved about the previous high of $10.13 on its weekly chart, climbing as far as $10.15 during Tuesday's rally. Though nearing an overbought situation, technically, the contract still looks to have room to move to the upside. That is unless fundamentals come back into play and kill the rally. The carry in the January-to-March futures spread has strengthened to 12 cents, covering 76% of calculated full commercial carry. Furthermore, the May-to-July spread with a carry of nearly 11 cents covers a slightly bearish 68% of calculated full commercial carry. This type of divergence, futures market rallying while futures spreads get more bearish, usually ends in favor of the commercial traders (spreads) meaning noncommercial interests could be looking for targets to sell. Some of the recent buying has been tied to weather in Argentina sparking the rally in soybean meal, and providing support to soybeans.

WHEAT From the time the opening summary (see above) was written to the writing of wheat's commentary, winter markets had moved from fractionally lower to fractionally higher. Generally speaking then, there isn't much going on in wheat other than light spillover buying from the other grains. March Chicago continues to find resistance at its 20-day moving average, calculated Wednesday at $4.38 1/4. Meanwhile, new-crop July Kansas City is 5 1/2 cents lower for the week but still holding support at $4.59 1/2. A move below that mark could set up a test of last week's new contract low of $4.53. Delivery of another 405 contracts was reported against the December Chicago issue, putting its total at 4,609 contracts. Delivery of another 164 contracts was reported against the December Kansas City issue, putting its total at 814 contracts.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.11	$0.01	-$0.42	Mar	$0.004
Soybeans:	$9.35	$0.10	-$0.73	Jan	-$0.002
SRW Wheat:	$3.92	-$0.02	-$0.41	Mar	$0.005
HRW Wheat:	$3.72	-$0.02	-$0.60	Mar	$0.003
HRS Wheat:	$5.97	-$0.02	-$0.30	Mar	$0.004

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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