DTN Early Word Grains
Nothing But Up
March corn was 1 cent higher, March soybeans were 1 cent higher, and March Chicago (SRW) wheat was 2 cents higher.
CME Globex Recap:The grain and oilseed complex has yet to close lower in the new year, and markets are mostly higher again early Wednesday morning. Of course Wednesday is only the second trading day of the year, so there's that. The U.S. dollar strengthened overnight putting light pressure on metals. However, the energy complex continued to move higher while cotton recovered a small part of Tuesday's sell-off. DJIA futures were higher again as well.
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The Dow Jones Industrial Average closed 104.79 points (0.4%) higher at 24,824.01, the NASDAQ Composite gained 103.51 points (1.5%) to 7,006.90, and the S&P 500 added 22.20 points (0.8%) to 2,695.81 Tuesday. DJIA futures were 50 points higher early Wednesday morning. Asian markets closed higher with Japan's Nikkei 225 still closed for holiday, Hong Kong's Hang Seng gaining 45.64 points (0.2%), and China's Shanghai Composite up 20.78 points (0.6%). European markets were trading mostly higher with London's FTSE 100 off 1.89 points, Germany's DAX up 45.78 points (0.4%), and France's CAC 40 gaining 20.97 points (0.4%). The euro lost 0.0047 to 1.2013 as the U.S. dollar index rallied 0.23 to 92.08. March 30-year T-Bonds were 5/32 higher at 151'29 while February gold slipped $0.60 to $1,315.50. Crude oil was $0.19 higher at $60.56 while Brent crude added $0.18 to $66.75. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.
| BULL | BEAR | ||
| 1) | Corn's minor and secondary trends are now up on daily and weekly charts respectively. | 1) | Corn's forward curve continues to reflect a long-term bearish commercial outlook. |
| 2) | Short-term trends for both old-crop March and new-crop November soybeans are now up. | 2) | Soybeans, both futures and cash, established long-term bearish technical signals at the end of December. |
| 3) | Noncommercial traders could continue to buy new-crop winter wheat futures based on chatter regarding early winterkill fears. | 3) | New-crop winter wheat spreads continue to show bearish levels of carry, indicating those who understand wheat (commercials) aren't buying into the idea of winterkill yet. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Corn contracts were posting small gains early Wednesday as uptrends on both minor (short-term) daily and secondary (intermediate-term) charts continue to strengthen. On its daily chart nearby March corn cleared its previous high of $3.54 1/4 overnight, entering a void up to $3.60 1/2 where not much trade occurred on its way down. As for cash corn, national average basis continues to firm with the DTN National Corn Index (NCI, national average cash price) calculated at $3.18 3/4 Tuesday, putting it at 51 cents under the July futures contract (see DTN Strategies). As for new-crop December, its minor uptrend has it in position to test initial resistance on its daily chart at $3.91, with the next target up near $3.98 1/2. However, its daily stochastics (short-term momentum study) is already above the overbought level of 80%, possibly limiting new buying interest for now.
SOYBEANS Soybeans were showing a small gain early Wednesday morning. Focusing on short-term daily charts, both old-crop and new-crop have established minor uptrends recently. For old-crop March initial resistance is pegged at $9.71 3/4, the $9.82 1/4. New-crop November has already traded above initial resistance at $9.82 3/4, the overnight session high was $9.84 1/4, with its next target up at $9.90 1/2. Beyond that targets are sitting at $9.97 and $10.03 1/4 (for more information, see the updated Technically Speaking blog on DTN later Wednesday morning). Fundamentally there is little fresh news to drive soybeans, as traders continue to monitor South American weather developments. Futures spreads have stabilized, with the market's forward curve not as bearish as it was a couple weeks ago.
WHEAT The key to winter wheat markets remains the uptrends seen in new-crop July contracts for both Kansas City (HRW) and Chicago (SRW). Most of the buying, to this point, has come from noncommercial traders and tied to early chatter of possible crop winterkill given the ongoing dry across much of the U.S. Midwest and Southern Plains growing areas, mixed with bitter cold temperatures the last week. However, July-to-September futures spreads for both markets have shown little weakening of carry with both still covering what is realistically (meaning without CME's Variable Storage Rate calculations) a bearish level of full commercial carry. As always, keep an eye on these spreads as an indicator of when those who actually understand wheat, aka the commercial side of the market, start to show concern for the weather and potential crop loss.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.19 | $0.03 | -$0.34 | Mar | $0.009 |
| Soybeans: | $8.91 | $0.06 | -$0.73 | Mar | $0.027 |
| SRW Wheat: | $3.99 | $0.05 | -$0.34 | Mar | -$0.020 |
| HRW Wheat: | $3.84 | $0.08 | -$0.50 | Mar | $0.005 |
| HRS Wheat: | $5.97 | $0.05 | -$0.21 | Mar | $0.022 |
Darin Newsom can be reached at darin.newsom@dtn.com
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