DTN Early Word Grains

Outside Markets Bend Grains Lower

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

March corn was down 2 3/4 cents, March soybeans were down 6 3/4 cents, and March Kansas City (HRW) wheat was down 4 1/4 cents.

CME Globex Recap:

On Friday, Punxsutawney Phil declared six more weeks of winter, but early Monday, traders are more concerned about rising interest rates and falling stock prices after Friday's jobs report pointed to more rate hikes ahead. Grains and oilseeds are mostly lower along with outside commodity markets as investors turn defensive in the face of stock market losses.

OUTSIDE MARKETS:

On Friday, the Dow Jones Industrial Average closed down 665.75 points (-2.5%) at 25,520.96, the NASDAQ Composite lost 144.91 points (-1.9%) to 7,240.95, and the S&P 500 dropped 59.85 points to 2,762.13. Early Monday, DJIA futures were down 160 points. Asian markets were mostly lower with Japan's Nikkei 225 down 592.45 points (-2.55%), Hong Kong's Hang Seng falling 356.56 points (-1.1%), and China's Shanghai Composite adding 25.42 points (0.7%). European markets were trading lower with London's FTSE 100 down 86.03 points (-1.2), Germany's DAX falling 80.51 points (-0.6%), and France's CAC 40 off 51.94 points (-1.0%). The euro was 0.0018 higher at 1.24820 as the U.S. dollar index was down 0.0420 to 89.1520. March 30-year T-Bonds were 5/32 lower at 144'20 while April gold added $1.70 to $1,339.00. Crude oil was $0.26 lower at $65.19 and Brent crude lost $0.58 to $68.00. China's Dalian soybean were a little higher and Malaysian palm oil futures were up 1.05% overnight.

BULL BEAR
1) Corn remains in a secondary (intermediate-term) seasonal uptrend. 1) Corn prices have plateaued after reaching the upper end of their three-month range.
2) Concerns about dry weather in Argentina remain a bullish issue for soybeans. 2) Short-term downtrends in soybeans are gaining momentum and the export pace remains bearish.
3) New-crop winter wheat contracts remain in uptrends on weekly charts. 3) Rising interest rates and falling stock prices have investors on the defensive, at least temporarily.

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MORE COMMODITY-SPECIFIC COMMENTS

CORN March corn is down 2 3/4 cents early Monday as investors turn defensive after Friday's 666-point drop in the stock market and better-than-expected jobs report, which adds weight to the argument for higher interest rates. Some early selling may also be a response to Friday's news that noncommercial traders turned slightly net long in corn on Jan. 30 for the first time since August. The Corn Belt will see cold temperatures this first week of February and the eastern Corn Belt has chances for moderate precipitation while the southeastern U.S. is expecting heavy rain. Argentina's corn continues to suffer hot and dry weather and is expecting more of the same this week. Technically, March corn is gradually trending higher in line with its seasonal tendency and is also encountering resistance at $3.65, its three-month high.

SOYBEANS March soybeans are down 6 3/4 cents early Monday, possibly headed for a fourth consecutive lower close as investors turn skittish in the face of rising interest rates and falling stock prices. Once again, Argentina was mostly dry over the weekend with temperatures in the 90s and that is expected to continue this week as the best rain chances stay in central Brazil. The uncertainty of how Argentina's crops turn out remains a bullish concern this season, but so far, the anticipation of Brazil having another big soybean harvest plus the recent concerns of higher interest rates is keeping March soybean prices under bearish pressure. Technically, the trend in March soybeans remains broadly sideways while short-term momentum is turning lower.

WHEAT March K.C. wheat is down 4 1/4 cents early, turning back from last week's highs amid a broad commodity sell-off. This week's forecast remains mostly dry for the western U.S. Plains while soft red winter wheat has chances for precipitation in the eastern Midwest. Friday's CFTC data showed noncommercial traders turned lightly net long in K.C. wheat on Jan. 30 and cut net shorts roughly in half in Chicago wheat. The result is that much of the pressure to cover short commitments has been spent and it may be more difficult to rally winter wheat prices higher from here, even as the winter wheat region remains dry early in 2018. For now, the trend in winter wheat is higher.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.31 $0.00 -$0.31 Mar $0.003
Soybeans: $9.10 -$0.07 -$0.69 Mar -$0.006
SRW Wheat: $4.17 -$0.04 -$0.30 Mar -$0.001
HRW Wheat: $4.22 -$0.03 -$0.42 Mar $0.003
HRS Wheat: $5.89 -$0.06 -$0.15 Mar $0.016

Todd Hultman can be reached at todd.hultman@dtn.com

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Todd Hultman