DTN Early Word Grains

By Darin Newsom
DTN Senior Analyst

6:00 a.m. CME Globex:

December corn was 2 cents lower, January soybeans were fractionally lower, and December Chicago wheat was 3 cents lower.

CME Globex Recap:

Grain contracts were lower early Monday, giving back some of Monday's surprise rally. Wheat was under the most pressure, down a quiet 3 cents early Tuesday despite a lower U.S. dollar index. Corn and soybeans were showing small losses following reports that China's economy is expected to hit its targeted growth rate of 7%. Outside markets were mostly higher led by gold and crude oil after news of Turkey shooting down a Russian jet near Syria.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 31.13 points lower Monday at 17,792.68. The NASDAQ Composite was down 2.44 points at 5,102.48. DJIA futures were 69 points lower overnight. Asian markets were mostly higher with the Nikkei up 45.08 points at 19,924.89 and China's Shanghai Composite gained 5.80 points. European markets were lower. The U.S. dollar index was down 0.213 at 99.590 after hitting 100.00 for the first time since last March Monday. Crude oil was $0.37 higher at $42.12 while Brent crude was $0.50 higher at $45.33. December gold was $8.30 higher at $1,075.10. Dalian soybean futures were higher while Malaysian palm oil futures were lower.

	BULL		BEAR
1)	If soybeans are able to rally Tuesday, spillover buying could pull corn higher.	1)	Turnaround Tuesday activity could put light pressure on corn.
2)	News that China's economy has stabilized could support a number of commodities, including soybeans.	2)	Export demand for U.S. soybeans continues to slow in comparison to last year's pace.
3)	A lower U.S. dollar index could lead to a light round of noncommercial short-covering in wheat.	3)	There is little fresh news to spark strong buying of wheat.

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 After posting another short-term bullish signal on its daily chart Monday, December corn pulled back overnight on light trade volume of only 8,300 contracts through early Tuesday morning. Initial minor (short-term) resistance at the 20-day moving average calculated at $3.37 3/4, then retracement resistance near $3.70 1/2. Monday's high was $3.67 1/2. Fundamentally there is little fresh news, though the carry in the March-to-May futures spread was trimmed to 5 3/4 cents at Monday's close, continuing to reflect commercial buying interest. Along with that, national average basis held steady despite the rally in the futures market. While Turnaround Tuesday activity could be seen, possible support from headlines of a stabilizing Chinese economy could provide support.

SOYBEANS Monday looked to be a typical "sell the rumor, buy the fact" situation in soybeans, with all the wild talk of cash supplies flooding the market following Argentina's presidential election giving away to the reality of slow change over time (for an in-depth discussion, see DTN South American Correspondent Alastair Stewart's "South America Calling" blog post from Monday). After closing near its session high of $8.65 1/4 Monday, the January contract pulled back slightly through early Tuesday morning on decent trade volume of 12,200 contracts. Furthermore, Jan soybeans is now in position to possibly establish a bullish pattern on its weekly chart if it can climb above last week's high of $8.67 1/2 (the overnight high was $8.66) and close higher for the week. Fundamentally the market has seen continued commercial buying interest in both futures spreads and basis, likely linked to the idea China's economy is starting to stabilize at targeted growth rates.

WHEAT The December Chicago wheat contract posted a bullish technical signal on its short-term daily chart Monday, hinting at a strengthening minor uptrend. Buying continues to come from commercial traders, though additional support could likely be tied to light noncommercial short-covering. However, the overnight session saw the market pull back from Monday's highs despite a sell-off in the U.S. dollar index. Trade volume was light with only 2,300 contracts of Dec Chicago changing hands through early Tuesday morning. There remains little fresh news to spark strong buying interest in the wheat complex, though a pullback in the dollar could allow the market to offset some of the expected pressure from Turnaround Tuesday mentality.

DTN Cash	Change From	National	Contract	Change from
Commodity	Index	Prev Day	Avg. Basis	Month	Prev Day
Corn:	$3.47	$0.04	-$0.20	Dec	$0.001
Soybeans:	$8.19	$0.07	-$0.45	Jan	$0.000
SRW Wheat:	$4.49	$0.07	-$0.46	Dec	$0.000
HRW Wheat:	$4.13	$0.08	-$0.51	Dec	$0.007
HRS Wheat:	$5.02	$0.09	-$0.15	Dec	$0.018

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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