DTN Early Word Grains

Grains Stay Green

6:00 a.m. CME Globex:

March corn was 1 cent higher, March soybeans were 2 cents higher, and July Kansas City (HRW) wheat was 5 cents higher.

CME Globex Recap:

The grain and oilseed complex traded higher again overnight into Wednesday morning. Winter wheat led the way, followed by soybeans then corn. Look for continued volatility Wednesday in equities with DJIA futures down more than 200 points. The U.S. dollar was stronger again overnight, putting pressure on the energy complex while metals traded mostly higher. Softs were mostly lower, with cotton able to post small gains.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 567.02 points (2.3%) higher at 24,912.77, the NASDAQ Composite gained 148.36 points (2.1%) to 7,115.88, and the S&P 500 rallied 46.20 points (1.7%) to 2,695.14 Tuesday. DJIA futures were 227 points lower early Wednesday morning. Asian markets closed mostly lower with Japan's Nikkei 225 up 35.13 points (0.2%), Hong Kong's Hang Seng down 272.22 points (0.9%), and China's Shanghai Composite off 61.39 points (1.8%). European markets were trading higher with London's FTSE 100 up 46.12 points (0.6%), Germany's DAX gaining 70.83 points (0.6%), and France's CAC 40 adding 26.58 points (0.5%). The euro was 0.0031 lower at 1.2347 as the U.S. dollar index gained 0.17 to 89.85. March 30-year T-Bonds were 6/32 higher at 146'07 while April gold added $1.40 to $1,330.90. Crude oil was $0.27 lower at $63.12 and Brent crude lost $0.16 to $66.70. China's Dalian soybean and Malaysian palm oil futures were both higher overnight.

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BULL BEAR
1) Old-crop corn spreads are nearing a bullish breakout, indicating demand is picking up. 1) The corn market finds itself overbought once again, possibly leading to renewed selling interest.
2) Soybean contracts posted a strong rally Tuesday with follow-through activity seen overnight into Wednesday morning. 2) Open interest in old-crop soybeans is going down during this rally, indicating short-covering activity rather than fresh buying.
3) Weather remains the issue for most of the U.S. Southern Plains HRW wheat growing area. 3) Global wheat fundamentals remain bearish.

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 contracts continued Tuesday's rally overnight into early Wednesday morning. Nearby March is testing initial resistance on its weekly chart at $3.64 1/2, with the next target up at $3.76 1/4. However, new-crop December cleared its initial resistance again Monday and could now set its sights on the next target up at $3.98 1/2. All three corn markets (cash, old-crop futures, and new-crop futures) are in seasonal uptrends that tend to last until early June. Fundamentally there seems to be more interest in the corn market with the March-to-May futures spread nearing a bullish breakout on its weekly close-only chart. This would suggest the commercial side of the market is expecting an uptick in demand, possibly tied to Argentina's poorer crop. With support coming from the commercial side noncommercial traders likely added to their newly established net-long futures position, with this coming Friday's CFTC Commitment of Traders report through Tuesday's close.

SOYBEANS Soybeans were able to follow Tuesday's strong rally with continued gains overnight into Wednesday morning. Unlike corn though, much of the rally in old-crop hasn't come from the commercial side with the March-to-May futures spreads still showing a carry fractions off its low of 11 1/2 cents. On the other hand the new-crop November-to-January spread is trending up, its carry whittled back to only 5 1/4 cents. Back to old-crop for a moment: Both March and May contracts have seen a decrease in open interest during this rally, reflecting the idea that the bulk of support has come from noncommercial short-covering. This isn't overly bullish, with the rally back to resistance at $9.95 1/2 (March) likely to spark renewed selling interest. Again keep in mind that the commercial side remains bearish heading into the next round of USDA report set for release this Thursday.

WHEAT Winter wheat contracts were posting solid gains early Wednesday morning, led once again by new-crop July Kansas City. This contract has extended the uptrend on its weekly chart to within sight of next resistance at $5.10. Weather across the U.S. Southern Plains remains an issue, possibly limiting new-crop forward sales. However, keep an eye on put option activity as producers look to lock in some of the recent gains while leaving the topside open. Fundamentally there is little fresh news, with USDA expected to make few changes to its wheat numbers in Thursday round of monthly reports.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.33 $0.05 -$0.31 Mar $0.003
Soybeans: $9.17 $0.16 -$0.69 Mar -$0.002
SRW Wheat: $4.16 $0.05 -$0.30 Mar -$0.007
HRW Wheat: $4.28 $0.08 -$0.41 Mar $0.006
HRS Wheat: $5.93 $0.06 -$0.15 Mar -$0.002

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

(KR)

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