DTN Early Word Grains

Friday's Matchup: USDA vs. USDX

6:00 a.m. CME Globex:

December corn was 2 cents higher, November soybeans were 4 cents higher, and December Chicago wheat was 2 cents higher.

CME Globex Recap:

Grains were higher early Friday, supported by continued selling in the U.S. dollar index (USDX) as the latter responds to FOMC comments released Thursday. However, the impending release of USDA's October monthly reports kept a lid on buying enthusiasm in grains. Commodities inn general were higher with both gold and crude oil posting solid gains.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 138.46 points higher Thursday at 17,050.75. The NASDAQ Composite was up 19.64 points at 4,810.70. DJIA futures were 3 points higher overnight. Asian markets were higher with the Nikkei up 297.50 points at 18,438.67 while China's Shanghai Composite was up 5.86 points. European markets were also higher. The U.S. dollar index was down 0.382 at 94.936. Crude oil was $1.02 higher at $50.45 while Brent crude was $0.59 higher at $53.64. December gold was $11.00 higher at $1,155.30. Dalian soybean futures and Malaysian palm oil futures were both lower.

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BULL BEAR
1) Corn production is expected to be decreased in USDA's October Crop Production report. 1) Corn production has been expected to be decreased in USDA's October Crop Production report.
2) Soybean ending stocks are expected to be trimmed in USDA's Supply and Demand report. 2) Soybeans have been unable to break out of its sideways range, hinting at possible pre-weekend selling.
3) Ending stocks of wheat, both global and domestic, are expected to be trimmed in Friday's reports. 3) Technically the Chicago wheat market is indicating the short-term trend has turned down.

See Grain Archives for more information on the fundamental situation in grains. See the DTN Ag Weather Brief for complete market weather comments.

MORE COMMODITY-SPECIFIC COMMENTS

CORN Pre-report estimates for corn production showed a reduction to 13.461 bb, down from September's 13.585 bb. This could be viewed as both bullish and bearish given the market has been looking for a reduction, so an unspectacular report by USDA could result in pre-weekend selling regardless of the number. Technically the December contract remains in an uptrend on all of its charts (daily, weekly, and continuous monthly), indicating the market has built in a more bullish longer term supply and demand scenario. Short-term technical resistance on the daily chart is at $3.94 1/2, then $4.01.

SOYBEANS As with corn, pre-report estimates for domestic soybean production were lower than USDA's September estimate, down about 50 mb at 3.884 bb. While 2015 acreage, yield, and production numbers will steal the spotlight the real interest could be in how USDA comes up with its new old-crop ending stocks figure of 191 mb (from the September 30 Quarterly Stocks report). New-crop ending stocks are expected to decrease, though given the pre-report range of 386 mb it will be difficult for USDA to find itself outside the fences. Technically November soybeans remain in a sideways trend with resistance pegged near $8.98 and support at the 20-day moving average near $8.80.

WHEAT Winter wheat contracts were higher early Friday with the December Chicago contract holding relatively well to its technical patterns. The contract tested initial support near $5.08 3/4 Thursday, a price that marks the 33% retracement level of the previous minor (short-term) uptrend from $4.63 through Wednesday's high of $5.31 1/2, before buying tied to the sharp sell-off in the U.S. dollar index (USDX) sparked a rally. Looking ahead to Friday, continued pressure in the USDX could keep buyers interested in wheat.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.58 -$0.04 -$0.34 Dec $0.005
Soybeans: $8.25 -$0.10 -$0.57 Nov $0.001
SRW Wheat: $4.57 -$0.04 -$0.55 Dec $0.015
HRW Wheat: $4.48 -$0.05 -$0.56 Dec -$0.002
HRS Wheat: $4.92 -$0.01 -$0.39 Dec $0.009

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

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

(CZ)

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