DTN Early Word Grains
The Haves and Have Nots
May corn was fractionally lower, May soybeans were 1 cent higher, and July Kansas City (HRW) wheat was 2 cents lower.
CME Globex Recap:Most of the global oilseed complex was higher overnight, with only Dalian soybeans and Chicago soybean oil posting losses. On the other hand, the grain complex was lower with the exception being rice. Energies were higher, supported by another solid rally in DJIA futures, though a slightly stronger U.S. dollar index had gold under pressure.
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The Dow Jones Industrial Average closed 171.58 points (0.7%) lower at 25,007.03, the NASDAQ Composite lost 77.31 points (1.0%) to 7,511.01, and the S&P 500 dropped 17.71 points (0.6%) to 2,765.31 Tuesday. DJIA futures were 119 points higher early Wednesday morning. Asian markets closed lower with Japan's Nikkei 225 down 190.81 points (0.9%), Hong Kong's Hang Seng losing 166.44 points (0.5%), and China's Shanghai Composite off 18.86 points (0.6%). European markets were trading mostly higher with London's FTSE 100 up 17.29 points (0.2%), Germany's DAX adding 41.13 points (0.3%), and France's CAC 40 gaining 16.74 points (0.3%). The euro was 0.0021 lower at 1.2371 while the U.S. dollar index rallied 0.11 to 89.80. March 30-year T-Bonds were 7/32 higher at 145'12 while April gold dropped $1.70 to $1,325.40. Crude oil was $0.27 higher at $60.98 as Brent crude gained $0.30 to $64.94. China's Dalian soybean futures were lower and Malaysian palm oil futures were higher overnight.
| BULL | BEAR | ||
| 1) | Corn has seen a string of morning announcements of new export sales being made. | 1) | The May-to-July corn futures spread is seeing its carry strengthen. |
| 2) | Noncommercial traders continue to defend their net-long futures holding in soybeans. | 2) | Similar to corn, but even more bearish, the May-to-July soybean spread is threatening a move to a new low weekly close in its carry beyond 10 1/2 cents. |
| 3) | The Southern Plains weather situation hasn't changed for the U.S. HRW wheat crop. | 3) | Old-crop wheat stocks, domestic in particular, remain bearish. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN Another day ending in "y" means another quiet overnight session for corn with old-crop contracts fractionally lower and new-crop fractionally higher. However, the market did trade a couple cents lower overnight with contracts near session highs early Wednesday morning. From a technical point of view, contracts are overbought on both daily (short-term) and weekly (intermediate-term)) charts. Fundamentally there is little change with the May-to-July spread continuing to cover a bearish level of calculated full commercial carry. The market has a string of consecutive days with new export sales announced, possibly extending through Wednesday. We'll see later in the morning. There were no deliveries reported against the March issue, leaving the total at 1,538 contracts.
SOYBEANS Soybeans were higher again overnight into early Wednesday morning, with old-crop May reaching the 38.2% retracement level ($10.51 1/4) of last week's sell-off from $10.82 1/2 through Monday's low of $10.32. Next resistance is the 50% retracement level of $10.57 1/4. The rally in new-crop November has been stronger, with the contract already retracing 76.4% ($10.42 1/2) of its sell-off from $10.48 through the low of $10.24 1/4. Keep a close eye on November, technically, as this week's rally sets up the potential for a short-term double-top on its daily chart or a bullish breakout. Fundamentally there isn't much fresh news, with Argentina's soybean production potential expected to be decreasing while private estimates for Brazil's production have climbed to near 118 mmt. Meanwhile, the old-crop May-to-July futures spread has seen its carry strengthen to 10 1/2 cents, equaling its low weekly close set the week of December 18, 2017. There were no deliveries reported against the March soybean issue, leaving its total at 821 contracts. March soybean meal also saw no deliveries reported (total of 864 contracts) while March soybean oil came in at 22 contracts (total of 5,151 contracts).
WHEAT No, it hasn't rained yet across the U.S. Southern Plains despite what the downturn in Kansas City wheat futures might suggest. This move still looks to be more technically driven than fundamental, with new-crop July dipping back below support near $5.35 1/2. Next support is pegged near $5.17 1/4, then $5.02 1/2. While it seems unlikely the contract will dip below the $5 mark during this sell-off, it's wheat, so anything bearish is possible. Market fundamentals haven't changed with old-crop dominated by thoughts of large ending stocks and not enough demand. This isn't expected to change over the course of Wednesday's session.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.54 | $0.00 | -$0.38 | May | -$0.007 |
| Soybeans: | $9.69 | $0.07 | -$0.80 | May | -$0.003 |
| SRW Wheat: | $4.51 | -$0.04 | -$0.35 | May | $0.001 |
| HRW Wheat: | $4.76 | -$0.02 | -$0.45 | May | $0.005 |
| HRS Wheat: | $6.06 | $0.02 | -$0.20 | May | $0.006 |
Darin Newsom can be reached at darin.newsom@dtn.com
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