DTN Early Word Grains

Grains Start December in the Green

6:00 a.m. CME Globex:

March corn was 2 cents higher, January soybeans were 4 cents higher, and March Chicago wheat was 3 cents higher.

CME Globex Recap:

Grain contracts were higher early Tuesday, eschewing the traditional Turnaround tendency following Monday's rally. Support came from a lower U.S. dollar index, though the greenback remains within striking distance of its long-term high, and reaction to Monday's long-delayed EPA announcement on RFS. Outside markets were also higher, though gains were small in both gold and crude oil.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 78.57 points lower Monday at 17,719.92. The NASDAQ Composite was down 18.85 points at 5,108.67. DJIA futures were 84 points higher overnight. Asian markets were higher with the Nikkei up 264.93 points at 20,012.40 and China's Shanghai Composite up 10.90 points. European markets were mostly higher. The U.S. dollar index was down 0.170 at 100.000. Crude oil was $0.24 higher at $41.89 while Brent crude was $0.25 higher at $44.87. February gold was $2.80 higher at $1,058.10. Dalian soybean futures were higher while Malaysian palm oil futures were lower.

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BULL BEAR
1) Noncommercial short-covering could provide light support to corn Tuesday. 1) Export demand for U.S. corn supplies continues to run behind projected pace.
2) The DTN National Soybean Index (national average cash price) looks to have established an uptrend on its weekly chart. 2) Countless bullish technical signals have failed in the soybean market over the last year.
3) Light buying in wheat could be tied to the modest sell-off in the U.S. dollar index Tuesday morning. 3) Commercial pressure is starting to build in the Chicago wheat market.

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 Corn contracts were higher overnight with most near session highs early Tuesday morning. Trade volume was still generally light, with the more active March showing 11,400 contracts changing hands. Buying was tied, at least in part, to Monday's holiday-delayed CFTC Commitments of Traders report that showed noncommercial interests moving to a net-short futures position of 20,047 contracts (as of Tuesday, November 24). In the absence of fresh bearish news the market could see a low volume round of noncommercial short-covering. Additional support continues to come from the commercial side of the market with the carry in the March-to-May futures spread trimmed to 5 1/2 cents. There continues to be no deliveries reported against the December contract.

SOYBEANS January soybeans pushed higher again overnight, extending its minor (short-term) uptrend to a test of resistance calculated at $8.85. Daily stochastics have crossed into overbought territory, opening the door for possible pressure to redevelop. However, the DTN National Soybean Index (national average cash price) moved to a new 4-week high of $8.36 Monday, confirming previous bullish indicators that its secondary (intermediate-term) trend has turned up. The market continues to find commercial buying interest, indicated by the weakening carry in the January-to-March futures spread. Overnight trade saw this carry trimmed to 1 3/4 cents.

WHEAT Deliveries against the Chicago December issue were large again with another 1,517 contracts reported putting the two-day total at 3,860 contracts. Despite this news the market was able to rally overnight, supported by the lower U.S. dollar index and spillover buying from the other grains. The March Chicago contract is sharply oversold, technically, possibly leading to a round of short-term short-covering by noncommercial traders. Monday's holiday-delayed CFTC Commitments of Traders report showed this group adding 1,121 contracts to their net-short futures position (through the week ending Tuesday, November 24). Increased commercial pressure has been seen in the Chicago market of late, as indicated by the strengthening carry in the March-to-May futures spread.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.46 $0.07 -$0.26 Mar $0.016
Soybeans: $8.36 $0.09 -$0.45 Jan $0.012
SRW Wheat: $4.23 -$0.02 -$0.53 Mar $0.019
HRW Wheat: $4.08 $0.09 -$0.65 Mar $0.025
HRS Wheat: $4.97 $0.04 -$0.10 Mar $0.031

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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