DTN Early Word Grains

Soybeans Stay Strong

6:00 a.m. CME Globex:

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

CME Globex Recap:

While soybeans continued to rally, corn and wheat sagged overnight. Activity looked to be quiet, in general, with small trading ranges seen across the board. Other commodity sectors were mixed with metals mostly lower, energies higher, and softs mixed. The U.S. dollar index rallied, slightly, while DJIA futures were sitting near unchanged.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 142.88 points (0.6%) higher at 26,214.60, the NASDAQ Composite gained 71.65 points (1.0%) to 7,408.03, and the S&P 500 rallied 22.67 points (0.8%) to 2,832.97 Monday. DJIA futures were 13 points lower early Tuesday morning. Asian markets closed higher with Japan's Nikkei 225 up 307.82 points (1.3%), Hong Kong's Hang Seng jumping 537.29 points (1.7%), and China's Shanghai Composite adding 45.14 points (1.3%). European markets were trading higher with London's FTSE 100 up 17.35 points (0.2%), Germany's DAX up 105.98 points (0.8%), and France's CAC 40 rallying 4.55 points (0.1%). The euro was 0.0006 lower at 1.2255 as the U.S. dollar index gained 0.02 to 90.41. March 30-year T-Bonds were 23/32 higher at 149'13 while February gold was gained $6.10 to $1,338.00. Crude oil was $0.18 higher at $63.75 and Brent crude added $0.16 to $69.19. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

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BULL BEAR
1) Short-term momentum indicators (technical) for corn remain bullish. 1)

Old-crop corn's forward curve continues to show a bearish level of carry.

2) Both old-crop and new-crop soybean contracts remain in short-term uptrends on their respective daily charts. 2) Old-crop and new-crop soybean contracts are testing expected retracement levels while short-term momentum studies move into overbought territory.
3) Much of the U.S. Southern Plains HRW growing area missed out on moisture from this weekend's winter storm. 3) There is no change in the long-term bearish fundamentals of 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 Basically, there remains little to see in the corn market. Old-crop March posted a quiet overnight range of 1 cent on volume (futures only) of 8,000 contracts. Meanwhile, March corn sits comfortably in the sideways-to-down trend on its daily chart between $3.60 1/2 and $3.45 1/2. New-crop December looks similar, moving 3/4 cent overnight while holding its sideways pattern between $3.91 and $3.79. What will it take for a bullish breakout? Either old-crop or new-crop needs to see a fundamental change to consistently attract buying interest. Early Tuesday morning shows this not to be the case, at least in old-crop, where the March-to-May and May-to-July futures spreads still show carry of greater than 70% of calculated full commercial carry. Firming basis is somewhat misleading, as it reflects merchandisers need to cover short-term demand with tightly held supplies as opposed to a changing perception of total supplies. Also note that a strengthening basis is seasonal, with national average corn basis tending to firm into early June.

SOYBEANS Both old-crop March and new-crop November soybeans remain in minor (short-term) uptrends on their respective daily charts. However, both have seen daily stochastics climb above the overbought level of 80%, often a precursor to a momentum shift from bullish to bearish. Meanwhile March continues to test resistance at $9.85 3/4, a price that marks the 50% retracement level of the previous downtrend from $10.27 through the low of $9.44 1/2. Given the bearish level of carry in the March-to-May futures spread, approximately 73% of calculated total cost of carry, a 50% retracement might be about as far as the contract can run at this time. As for November, the contract is testing resistance near $10.02 1/2, the 61.8% retracement level of its previous downtrend from $10.24 through the low of $9.67 1/2. The carry in the new-crop November-to-January futures spread remains neutral, so this 61.8% retracement is not out of line, but one shouldn't expect the contract to extend its rally much higher for now. Fundamentally there is little fresh news as the market continues to watch South American weather developments.

WHEAT Winter wheat markets were lower early Tuesday following a quiet overnight session. Much of the U.S. Southern Plains HRW growing area missed out on the bulk of the winter storm that passed through this weekend through Monday, as the storm generally used I-70 in northern Kansas as its southern boundary. Temperatures across the Southern Plains are now expected to warm, with little new precipitation in the forecast. July Kansas City wheat remains in an uptrend on its weekly chart, needing a move above its previous weekly high of $4.70 3/4 to confirm it has moved into Wave 3 of an expected 5-wave move. Monday saw the contract reach $4.61 3/4 before falling back a bit.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.20 -$0.01 -$0.32 Mar -$0.002
Soybeans: $9.14 $0.05 -$0.70 Mar -$0.015
SRW Wheat: $3.95 $0.03 -$0.31 Mar $0.001
HRW Wheat: $3.85 $0.00 -$0.44 Mar -$0.007
HRS Wheat: $5.88 -$0.02 -$0.19 Mar $0.000

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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