DTN Early Word Grains

Wearin' O' the Green in Grains

6:00 a.m. CME Globex:

May corn was fractionally higher, May soybeans were 3 cents higher, and July Kansas City (HRW) wheat was 4 cents higher.

CME Globex Recap:

Though a few days early, the grain and oilseed complex is dressed like it's St. Patrick's Day early Tuesday, all in green. Winter wheat and soybeans led the overnight rally, with the former still suffering from dry, windy weather across the U.S. Southern Plains. Soybeans were able to build on Monday's rally despite the fact production estimates for Brazil are growing larger as harvest continues to progress.


The Dow Jones Industrial Average closed 157.13 points (0.6%) lower at 25,178.61, the NASDAQ Composite gained 27.51 points (0.4%) to 7,588.32, and the S&P 500 gave back 3.55 points (0.1%) to 2,783.02 Monday. DJIA futures were 58 points higher early Tuesday morning. Asian markets closed mixed with Japan's Nikkei 225 up 144.07 points (0.6%), Hong Kong's Hang Seng gaining 7.12 points, and China's Shanghai Composite losing 16.46 points (0.5%). European markets were trading mostly higher with London's FTSE 100 up 1.59 points, Germany's DAX adding 19.43 points (0.2%), and France's CAC 40 gaining 24.00 points (0.5%). The euro was 0.0007 lower at 1.2329 while the U.S. dollar index rallied 0.13 to 90.06. March 30-year T-Bonds were 9/32 lower at 144'15 while April gold dropped $2.10 to $1,318.70. Crude oil was $0.18 higher at $61.54 as Brent crude gained $0.12 to $65.07. China's Dalian soybean and Malaysian palm oil futures were higher overnight.

1) Corn continues to see strong export sales numbers, increasing the hopes that stronger shipment numbers will soon follow. 1) Speaking of slow corn export shipments, last Thursday's weekly update of marketing year totals continues to project total demand near 1.84 bb.
2) Noncommercial traders continue to defend their net-long futures holding in soybeans. 2) Soybean contracts remain in well-defined 3-wave short-term downtrends on daily charts.
3) It remains windy and dry across the U.S. Southern Plains HRW wheat growing area. 3) Old-crop wheat stocks, domestic in particular, remain bearish.

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CORN Corn was fractionally higher overnight into early Tuesday morning. Why? Because that's what corn does when wheat and soybeans both add about a nickel. Technically there isn't much new to report, though old-crop May was able to close its potential bearish breakaway gap left from Friday's low through Sunday's overnight high. This helps the contract's daily chart look not quite so bearish, though momentum indicators show May corn continues to be sharply overbought short-term. Fundamentally the story remains demand, where corn continues to see strong export sales and a lagging export shipment pace. Though overnight trade was quiet, the carry in the May-to-July futures spread has crept back to covering a bearish level of calculated full commercial carry. This is a concern for the market as it could influence noncommercial activity, eventually. Delivery of 441 contracts was reported against the March issue, putting the total at 1,538 contracts.

SOYBEANS Soybeans have turned into an interesting technical study following Monday's rally and the overnight into Tuesday morning follow-through. Daily charts for both old-crop May and new-crop November show classic minor (short-term) 3-wave downtrends, with this week's rally looking like Wave B (second wave) leading to tests of retracement resistance. For the May that is an area between $10.44 and $10.51, and $10.39 to $10.42 1/2 on the November chart. Key to the ongoing strength of both markets (old-crop, new-crop) will be the action in futures spreads. Monday saw commercial selling develop in old-crop, while new-crop spreads continued to see weakening carry. Some of the latter was likely due to low trade volume in far deferred contracts, though. Back to the May-to-July: Its carry has strengthened to 10 1/2 cents, covering a bearish 68% of calculated full commercial carry. If this downward trend (stronger carry) continues it could eventually spark a round of noncommercial selling that would lead to Wave C (third wave) of the minor downtrend. There were no deliveries reported against the March soybean issue, leaving its total at 821 contracts. March soybean meal saw another 4 contracts delivered (total of 864 contracts) while March soybean oil came in at 4 contracts (total of 5,129 contracts).

WHEAT The National Weather Service out of Dodge City, Kansas reported Monday that the count was up to 156 days with no precipitation measuring greater than 0.10 of an inch. This is representative of much of the U.S. Southern Plains, sparking renewed buying interest in the July Kansas City wheat contract Monday that carried over into the overnight session and early Tuesday morning. Technically July KC is showing a similar pattern to both corn and soybeans, with the contract in a minor (short-term) downtrend but rallying off its test of initial support at $5.35 1/2. Fundamentally, wheat is torn between having too much old-crop on hand (with traders awaiting the next round of quarterly stocks numbers at the end of the month) and concern over the potential for reduced production of new-crop HRW wheat.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.53 $0.00 -$0.37 May -$0.003
Soybeans: $9.62 $0.02 -$0.79 May $0.000
SRW Wheat: $4.55 $0.01 -$0.35 May -$0.006
HRW Wheat: $4.77 $0.03 -$0.45 May $0.015
HRS Wheat: $6.04 $0.07 -$0.20 May $0.002

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

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