DTN Early Word Grains

Leftover Turkey and Cracked China

6:00 a.m. CME Globex:

Grains were closed overnight for the U.S. Thanksgiving Holiday, scheduled to open at 8:30 am (CT).

CME Globex Recap:

Black Friday morning has global markets focusing on the continued situation between Turkey and Russian, as well as an investigation into violations by two Chinese brokerage houses. The latter has battered Chinese stock markets and could have a ripple effect on commodities, with crude oil down more than $1.00 and gold off almost $6.00.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 1.20 points higher Wednesday at 17,813.39. The NASDAQ Composite was up 13.33 point at 5,116.14. DJIA futures were 5 points higher overnight. Asian markets were mostly lower with the Nikkei down 60.57 points at 19,883.94 and China's Shanghai Composite posting a sharp sell-off of 199.25 points (5.5%). European markets were mostly higher. The U.S. dollar index was up 0.245 at 100.040, its overnight high just short of Wednesday's peak of 100.070. The long-term high remains 100.390. Crude oil was $1.01 lower at $42.03 while Brent crude was $0.42 lower at $45.04. February gold was $5.20 lower at $1,064.50. Dalian soybean futures were lower while Malaysian palm oil futures were higher.

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BULL BEAR
1) Commercial buying continues to support the corn market. 1) Possible spillover pressure from soybeans could pull corn lower Friday.
2) Soybeans could see another round of bullish weekly export sales and shipment numbers (for the week ending Thursday, November 19). 2) Selling tied to China's stock market investigation could have the soy complex on the defensive Friday.
3) Light noncommercial short-covering could support the wheat market Friday. 3) Russia's threats of economic retaliation against Turkey could continue to strengthen the U.S. dollar index, putting pressure on the wheat complex.

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 With the December corn contract set to go into delivery next Monday, the March issue is now the most heavily watched in the market. That being said, like the December, its minor (short-term) trend is up with both volume and open interest still increasing. Fundamentally the March-to-May futures spread is sitting at a 5 1/2 carry (as of Wednesday's close), covering a neutral level of total cost of carry but still trending up (weakening carry). Resistance in this spread (on its weekly close only chart) is at 5 cents. Corn is expected to see a quiet holiday shortened session, grain markets close at 12:05 pm (CT), though pressure from the Chinese brokerage investigation could be seen.

SOYBEANS January soybeans are in position to establish a bullish technical pattern on its weekly charts, setting the stage for a secondary (intermediate-term) uptrend (for more information, see Wednesday's Technically Speaking blog post "Jan Soybeans: We've Seen This Show Before"). On its daily charts, the Jan beans contract has minor (short-term) technical resistance pegged near $8.86 (the contract closed at $8.75 1/4 Wednesday after posting a high of $8.77). Historically, or so it's believed, the soybean market is thought to close higher both the day before and day after the Thanksgiving holiday. Wednesday saw the market post solid gains of 11 1/2 cents. Soybeans could see selling tied to the investigation in China's stock markets similar to what occurred overnight at the Dalian exchange. Friday's session could be active despite its earlier holiday closing bell of 12:05 pm (CT).

WHEAT The wheat complex could be looking at another day of pressure Friday given the continued rally in the U.S. dollar index. Some of the support for the latter is coming from the weakness of Turkey's lira as tension between Turkey and Russia to grow with Russia now threatening economic retaliation for the downing of its fighter jet. Fundamentally, much of the winter wheat area saw moisture of some kind Thursday, possibly putting pressure on new Chicago and Kansas City futures and futures spreads. Trade volume is expected to be light, opening the door to possible wide price ranges ahead of the early 12:05 pm (CT) close.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.46 $0.02 -$0.27 Mar -$0.015
Soybeans: $8.30 $0.11 -$0.46 Jan -$0.006
SRW Wheat: $4.36 -$0.05 -$0.51 Mar -$0.044
HRW Wheat: $4.06 -$0.01 -$0.66 Mar -$0.003
HRS Wheat: $4.97 $0.01 -$0.12 Mar $0.004

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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