DTN Early Word Grains

Grains Gain Ground Overnight

6:00 a.m. CME Globex:

December corn was 1 cent higher, January soybeans were 1 cent higher, and December Chicago wheat was 1 cent higher.

CME Globex Recap:

Grain contracts were trading higher early Wednesday despite a sharp rally by the U.S. dollar index, the latter pushing back above 100.000 and testing its long-term high. This has both energies and gold trading lower, though crude oil is giving back only part of Tuesday's strong rally. DJIA futures were higher as traders await the release of a long list of economic data Wednesday morning.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 19.51 points higher Tuesday at 17,812.19. The NASDAQ Composite was up 0.33 point at 5,102.81. DJIA futures were 55 points higher overnight. Asian markets were mixed with the Nikkei down 77.31 points at 19,847.58 and China's Shanghai Composite gained 31.82 points. European markets were mostly higher. The U.S. dollar index was up 0.533 at 100.060 after hitting a high of 100.070 overnight. Its long-term high is 100.390. Crude oil was $0.58 lower at $42.29 while Brent crude was $0.62 lower at $45.50. December gold was $2.00 lower at $1,071.80. Dalian soybean futures and Malaysian palm oil futures were both mostly higher.

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BULL BEAR
1) Commercial buying continues to support the corn market. 1) Corn could see trade patterns similar to Tuesday when light buying interest died out, allowing the market to drift lower late in the day.
2) Back in the day of human-driven trade, the soybean market tended to close higher the day before and the day after the Thanksgiving holiday. 2) If commercial buying dries up in soybeans, the stronger U.S. dollar index could push the market lower.
3) Possible spillover buying from the other grains, albeit light, could support wheat Wednesday. 3) The strong rally in the U.S. dollar index is expected to put pressure on 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 The corn market was higher early Wednesday, erasing some of Tuesday's late sell-off. Trade volume was light overnight with December registering only 7,300 contracts while 9,400 contracts of the more actively traded March changed hands. Commercial buying continues to support the corn market in general with the carry in the December-to-March and March-to-May futures spreads both sitting at 5 1/2 cents. Technically the minor (short-term) trends of both the December and March futures contracts is up while secondary (intermediate-term) and major (long-term) trends are sideways. Wednesday's session could see light pre-holiday activity, though traders will keep an eye on the strong rally in the U.S. dollar index given all the financial data set for release.

SOYBEANS Technically, January soybeans are in position to establish a bullish pattern on its weekly chart, depending on where Friday's close is in relation to last week's settlement of $8.57 1/2 (for more information see DTN's Technically Speaking blog post later Wednesday morning). Jan beans were priced near $8.65 early Wednesday morning on trade volume of only 7,700 contracts. It should be noted, for fun if nothing else, that historically soybeans trade higher the day before and the day after the Thanksgiving holiday. Fundamentally, futures spreads are trending sideways at bullish (January-to-March) or neutral (the balance of the 2015-2016 forward curve) levels of carry. The bullishness of the nearby January-to-March spread continues to reflect tightly held supplies versus solid short-term demand.

WHEAT March wheat has taken the role of heaviest traded from December as commercial pressure starts to build in the market. Tuesday saw the wheat complex in general sell-off, with continued pressure tied to the strong U.S. dollar index possible Wednesday. The Chicago December-to-March futures spread has seen its carry strengthen to 5 1/2 cents while the March-to-May sits at 8 3/4 cents. The latter reflects a more bearish view of intermediate-term fundamentals. Technically, March Chicago wheat continues to trend sideways on its weekly chart, holding above last week's low of $4.82.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.44 -$0.03 -$0.20 Dec $0.001
Soybeans: $8.19 -$0.01 -$0.45 Jan -$0.001
SRW Wheat: $4.42 -$0.08 -$0.43 Dec $0.030
HRW Wheat: $4.07 -$0.07 -$0.51 Dec $0.005
HRS Wheat: $4.96 -$0.05 -$0.13 Dec $0.017

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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