DTN Early Word Grains

Grains, Oilseeds Rebound Overnight

6:00 a.m. CME Globex:

March corn was fractionally lower, March soybeans were 4 cents higher, and July Kansas City (HRW) wheat was fractionally higher.

CME Globex Recap:

The grain and oilseed complex was mostly higher early Tuesday morning after starting overnight session under pressure once again. Soybeans led the rally, gaining about a nickel, while wheat was a penny higher and corn a halfpenny lower. The U.S. dollar was down, providing support to gold, though the energy complex was unable to find buying interest. The big story remains the Dow, where the Big Board has lost 10% of its value since its high of 26,616.71 on January 26. DJIA futures were down another 110 points overnight.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 1,175.21 points (4.6%) lower at 24,345.75, the NASDAQ Composite lost 273.42 points (3.8%) to 6,967.53, and the S&P 500 fell 113.19 points (4.1%) to 2,648.94 Monday. DJIA futures were 110 points lower early Tuesday morning. Asian markets closed lower with Japan's Nikkei 225 down 1,071.84 points (4.7%), Hong Kong's Hang Seng falling 1,649.80 points (5.1%), and China's Shanghai Composite losing 116.85 points (3.4%). European markets were trading lower with London's FTSE 100 down 133.84 points (1.8%), Germany's DAX falling 239.57 points (1.9%), and France's CAC 40 off 104.99 points (2.0%). The euro was 0.0039 higher at 1.2406 as the U.S. dollar index lost 0.12 to 89.51. March 30-year T-Bonds were 1-3/32 higher at 146'25 while April gold added $9.00 to $1,345.50. Crude oil was $0.46 lower at $63.69 and Brent crude lost $0.52 to $67.10. China's Dalian soybean future were higher and Malaysian palm oil futures were lower overnight.

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BULL BEAR
1) Old-crop corn spreads are threatening a potential bullish breakout of recent sideways patterns, hinting at increased demand. 1) Corn contracts have rolled over into short-term downtrends.
2) Soybean contracts have rallied off overnight tests of minor support. 2) The strong carry in the March-to-May soybean spread continues to reflect a bearish short-term supply and demand situation.
3) Much of the U.S. Southern Plains HRW growing area missed out on this week's snow so far. 3) Winter wheat's short-term trends remain down.

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 Corn posted a quiet overnight session with contracts showing fractional losses early Tuesday morning. However, most were near session highs due to spillover buying from soybeans. Both old-crop March and new-crop December have rolled over into short-term downtrends on their daily charts, with next minor support for March at $3.54 1/2. This price marks the 50% retracement level of its previous uptrend from $3.46 1/2 through the recent high of $3.62 1/2. Fundamentally there hasn't been much change in the market with the old-crop March-to-May and May-to-July futures spreads trending sideways at a barely bearish level of calculated full commercial carry. If these spreads can post a bullish breakout, it could possibly lead to another round of noncommercial buying on the idea demand is starting to pick up.

SOYBEANS Soybean contracts were able to bounce off session lows overnight to post modest rallies through early Tuesday morning. Interestingly enough, those lows were tests of minor (short-term) support on daily charts for both old-crop March and new-crop November. Take March for example: Its low of $9.67 3/4 tested support at $9.67 1/2, the 50% retracement level of the previous uptrend from $9.44 1/2 through the high of $10.04 3/4. November's overnight low of $9.89 1/4 was within sight of its next short-term support level of $9.88, the 61.8% retracement level of its previous uptrend from $9.67 1/2 through the high of $10.17. While both have rallied, neither have finished off their short-term downtrends yet, meaning both are likely to run out of bullish momentum after a day or two. The leader is expected to be the March contract as the March-to-May futures spread continues to troll along the bottom at a bearish 11 1/2-cent carry.

WHEAT Winter wheat contracts were unchanged to fractionally higher early Tuesday morning, with new-crop July Kansas City wheat continuing to lead the way. Monday's sell-off saw the contract test initial minor (short-term) support on its daily chart near $4.86 3/4, posting a low of $4.86 before rallying to close at $4.91. Like soybeans though, winter wheat remains in a short-term downtrend meaning contracts are likely to lose what little bullish momentum has emerged, with next support for July KC down at $4.77 3/4, then $4.70 3/4. Fundamentally parts of the U.S. Southern Plains and Midwest growing areas have seen snow so far this week, though snow didn't move much further south than northern Kansas.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.28 -$0.03 -$0.31 Mar -$0.001
Soybeans: $9.01 -$0.09 -$0.69 Mar $0.003
SRW Wheat: $4.11 -$0.06 -$0.29 Mar $0.004
HRW Wheat: $4.20 -$0.01 -$0.42 Mar $0.001
HRS Wheat: $5.87 -$0.02 -$0.15 Mar -$0.003

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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