DTN Early Word Grains
Wheat is Leaving 'Em in the Dust
March corn was 1 cent higher, March soybeans were 1 cent higher, and July Kansas City (HRW) wheat was 10 cents higher.
CME Globex Recap:Kansas City wheat posted a strong double-digit gain overnight, far outdistancing gains seen over the rest of the grain and oilseed complex. Chicago wheat was 6 cents higher and Minneapolis spring 4 cents higher, while corn and soybeans both gained a penny. Most other commodities were lower early Tuesday morning despite a slightly weaker U.S. dollar. DJIA futures were showing a triple-digit loss following the sharp sell-off by the Big Board Monday.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 177.23 points (0.7%) lower at 26,439.48, the NASDAQ Composite lost 39.27 points (0.5%) to 7,466.51, and the S&P 500 fell 19.34 points (0.7%) to 2,853.53 Monday. DJIA futures were 172 points lower early Tuesday morning. Asian markets closed lower with Japan's Nikkei 225 down 337.37 points (1.4%), Hong Kong's Hang Seng falling 359.60 points (1.1%), and China's Shanghai Composite off 34.99 points (1.0%). European markets were trading lower with London's FTSE 100 down 39.34 points (0.5%), Germany's DAX losing 64.29 points (0.5%), and France's CAC 40 off 16.27 points (0.3%). The euro was 0.0027 higher at 1.2409 as the U.S. dollar index dropped 0.20 to 89.14. March 30-year T-Bonds were 3/32 higher at 148'07 while February gold added $3.70 to $1,344.00. Crude oil was $0.51 lower at $65.05 and Brent crude lost $0.24 to $69.22. China's Dalian soybean futures were mixed and Malaysian palm oil futures were lower overnight.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
BULL | BEAR | ||
1) | Light commercial buying has been providing support to corn's rally of late, with the carry in the March-to-May spread nearing a neutral level. | 1) | Corn contracts are in short-term overbought technical situations. |
2) | South American weather concerns could keep noncommercial traders buying in soybeans another day. | 2) | Both old-crop March and new-crop November soybeans remain in short-term downtrends on their respective daily charts. |
3) | The July Kansas City wheat contract continues to extend its secondary uptrend on concerns over weather and potential crop conditions. | 3) | The most bearish thing about winter wheat markets continues to be the strong carry in forward curves. |
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 COMMENTSCORN The corn market was higher again early Tuesday, with the nearby March contract approaching a possible short-term bearish turn. The contract is testing support at its previous high of $3.60 1/2 (from December 4) while daily stochastics (short-term momentum study) have climbed above the overbought mark of 80%. However, given that it's Tuesday, and the CFTC Commitment of Traders report this coming Friday will show positions as of today's close, another session of noncommercial short-covering is possible. Also, keep an eye on the March-to-May futures spread as it has stabilized with its carry between 7 3/4 cents and 8 cents. Both cover a bearish level of calculated full commercial carry, but a bullish breakout (carry weakening beyond 7 3/4 cents) could move the nearby spread to a neutral level. If this happens it would provide more ammunition for a continued short-covering led rally.
SOYBEANS Despite Monday's rally both old-crop March and new-crop November soybeans remain in minor (short-term) downtrends on daily charts. Keep in mind though that chart patterns can be trumped by longer-term chart signals, making those seen on daily charts less reliable than those on weekly and monthly charts. Still, it would not be a surprise if soybeans lose their overnight bullish momentum during Tuesday's session, of if not Tuesday than Wednesday. Initial support for the March contract is at Friday's low of $9.83 3/4 and resistance Thursday's high of $10.02. The March-to-May futures spread remains in a solid downtrend (strengthening carry, more bearish fundamentals), though this trend has stabilized short-term between 11 1/4 cents and 11 1/2 cents on its weekly close-only chart. On the other hand, the May-to-July at a 9 1/2-cent carry continues to reflect a more neutral market view of supply and demand longer-term.
WHEAT The story in wheat continues to be new-crop Kansas City July. Spurred by continued dry, windy conditions over much of the U.S. Southern Plains HRW growing area the contract easily blew through projected technical resistance near $4.38 1/2 on its weekly chart. This price marked the 23.6% retracement level, one that wasn't really expected to slow the rally much, with the 38.2% mark up at $5.10. Weekly stochastics (intermediate-term momentum study) remain bullish and below the overbought level of 80%. Crop condition is a growing concern as winter nears its 2/3 completion point at the end of January. Key to the rally will be if the Kansas City July-to-September carry starts to weaken again, signaling increased commercial buying, with resistance on its weekly close-only chart at 14 1/2 cents.
DTN Cash | Change From | National | Contract | Change from | |
Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
Corn: | $3.27 | $0.02 | -$0.32 | Mar | -$0.001 |
Soybeans: | $9.23 | $0.06 | -$0.68 | Mar | $0.002 |
SRW Wheat: | $4.19 | $0.08 | -$0.30 | Mar | -$0.001 |
HRW Wheat: | $4.13 | $0.10 | -$0.40 | Mar | $0.000 |
HRS Wheat: | $5.96 | -$0.01 | -$0.18 | Mar | -$0.006 |
Darin Newsom can be reached at darin.newsom@dtn.com
Darin can be followed throughout the day at www.twitter.com\DarinNewsom
(BAS)
Copyright 2018 DTN/The Progressive Farmer. All rights reserved.