DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

May corn was fractionally lower, May soybeans were 1 cent lower, and July Kansas City (HRW) wheat was 5 cents lower.

CME Globex Recap:

The grain and oilseed complex was showing small losses early Tuesday, appearing pink on the ProphetX screen, despite a slightly weaker U.S. dollar. The biggest loser was the wheat complex where contracts were down about a nickel following Monday's double-digit rally in both Chicago and Kansas City. Energies and metals were mostly higher, while DJIA futures continue to rally.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 336.70 points (1.4%) higher at 24,874.76, the NASDAQ Composite gained 72.84 points (1.0%) to 7,330.70, and the S&P 500 rallied 26.69 points (1.1%) to 2,720.94 Monday. DJIA futures were 98 points higher early Tuesday morning. Asian markets closed mostly higher with Japan's Nikkei 225 up 375.67 points (1.8%), Hong Kong's Hang Seng rallying 624.34 points (2.1%), and China's Shanghai Composite gaining 32.72 points (1.0%). European markets were trading higher with London's FTSE 100 up 67.94 points (0.9%), Germany's DAX gaining 132.42 points (1.1%), and France's CAC 40 adding 38.40 points (0.7%). The euro was 0.0014 higher at 1.2350 while the U.S. dollar index slipped 0.06 to 89.94. March 30-year T-Bonds were 7/32 lower at 142'29 while April gold added $5.40 to $1,325.30. Crude oil was $0.31 higher at $62.88 as Brent crude rallied $0.23 to $65.77. China's Dalian soybean futures were mostly higher and Malaysian palm oil futures were higher overnight.

	BULL		BEAR
1)	If soybeans rally again Tuesday, look for corn to follow.	1)	Actual demand remains slow for U.S. corn.
2)	It's not a matter of if USDA cuts its Argentine soybean production estimate in Thursday's WASDE report, but how much.	2)	At some point, weather markets end quickly. Such will be the case for soybeans this time as well.
3)	Weather across the U.S. Southern Plains remains the main bullish factor for domestic wheat at this time.	3)	The bottom line for wheat is domestic old-crop ending stocks are still projected at greater than 1.0 bb.

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 Not much has changed in corn over the last 24 hours: Both old-crop and new-crop futures, as well as the DTN National Corn Index (national average cash price), remain in seasonal uptrends on weekly charts. Current demand doesn't seem to agree with the commercial buying that continues to provide support with basis firming and the May-to-July futures spread holding at neutral levels of calculated full commercial carry. Meanwhile, noncommercial traders have continued adding to their net-long futures position, awaiting Friday's weekly CFTC update as of today's close. As has been seen of late, look for corn to rally if soybeans find buying interest again. Otherwise, it could be a quiet session as traders look ahead to Thursday's monthly round of USDA Supply and Demand reports. Delivery of 213 contracts was reported against the March issue, putting the total at 813 contracts.

SOYBEANS Though soybean contracts took a breather overnight, the story remains the same. It's not a matter of if USDA lowers its Argentine production estimate in this Thursday's monthly WASDE report, but how much. Similarly, the question is how deep a cut will this cause in global ending stocks estimates. The futures market is comfortable rallying at this time, despite technical signals showing soybeans to be overbought on both daily and weekly charts. The key is the market's long-term monthly studies that showed a bullish breakout at the end of February, a move that now projects a high monthly close near $11.53. National average basis continues to hold together relatively well despite the rally in futures, while the May-to-July futures spread continues to trend up (weakening carry). For now the market is giving clear indications it is far more bullish that what USDA is expected to project in its domestic supply and demand numbers. There were no deliveries reported against the March soybean issue, leaving its total at 821 contracts. March soybean meal saw another 135 contracts delivered (total of 542 contracts) while March soybean oil came in at 125 contracts (total of 4,972 contracts).

WHEAT The wheat complex was lower early Tuesday morning, with solid selling seen in winter wheat markets. This isn't an overly surprising development given Monday's strong double-digit rally. Despite the lower overnight trade, new-crop Kansas City (and Chicago) July remains in an uptrend on its weekly chart. The KC contract has cleared resistance near $5.53 with the next target up near $5.80. The driving force remains dry, windy weather across the U.S. Southern Plains, conditions that aren't expected to change any time soon. Therefore, look for winter wheat to continue to find traders willing to buy dips as opposed to selling rallies.

	DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.51	$0.02	-$0.37	May	$0.000
Soybeans:	$9.98	$0.06	-$0.79	May	-$0.001
SRW Wheat:	$4.74	$0.10	-$0.36	May	$0.010
HRW Wheat:	$4.98	$0.12	-$0.48	May	$0.001
HRS Wheat:	$6.03	$0.04	-$0.22	May	$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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