• With the needles noise created by USDA's monthly Supply and Demand update out of the way, the Grains sector was quiet again overnight through early Wednesday morning. 

• Fundamentally, nothing about the corn market has changed with futures spreads growing more bullish since mid-August. 

• The wheat sub-sector continues to be driven by noncommercial short-covering. 

Morning Summary: I’ve long been fascinated by rivers. There is something about the quiet power they hold, the independence they represent, and their seemingly endless utility that intrigues me. During my 20-some years in Omaha I’ve crossed the Kerry Bridge over the Missouri River into Iowa and back countless times. The opportunities I’ve had to go to New Orleans have included long walks along the Mighty Mississippi, of course stopping to contemplate the great river with a Mark Twain book while munching on fresh beignets and chicory coffee from Café Du Mond. I was reminded of all this following Tuesday’s session that included another needless monthly USDA WASDE report. Yes, it made a splash, like a boulder falling into a wide river, before the river we call markets simply swallowed the noise and rolled along, saying nothing. A look at the Barchart Futures Market Heat Map Wednesday morning shows the Grains sector near unchanged, fittingly enough, the boulder already forgotten as the river makes its way toward the sea. I’ll talk about grain markets in more detail momentarily, but it’s interesting to note corn and the wheat sub-sector is quietly in the green while the oilseed markets are showing small losses early Wednesday. 

Corn: As mentioned, the corn market was showing a small gain to start the day with the March issue (ZCH25) continuing to bang its head against the next round number of $4.50 after closing at $4.49 Tuesday. March registered 25,200 contracts changing hands overnight, not big trade volume but more than what we’ve seen of late. Nothing about corn has changed this week, with fundamentals growing more bullish over the last number of months while funds built a net-long futures position in response. Speaking of which, March closed 16.75 cents higher from Tuesday-to-Tuesday while the carry in the March-May futures spread strengthened by 0.5 cent. This tells us there was some commercial selling this past week, particularly Tuesday as Watson jumped into the river chasing the boulder. It makes sense there was some cash sales made as March touched $4.50, after all it was the next big round number. The National Corn Index (national average cash price) was calculated near $4.24 Tuesday evening, up about 7.5 cents for the day and putting national average basis at 25.0 cents under March futures. Last Friday’s final figure came in at 24.5 cents under March, again reflecting increased selling from the commercial side. 

Soybeans: The soybean market was indeed showing a small loss early Wednesday morning with January down 3.25 cents at this writing on overnight trade volume of about 24,000 contracts. As with corn, that wasn’t heavy activity as January mustered an initial follow-through rally of only 2.75 cents before slipping as much as 3.25 cents. It was a quiet night on the river, but the soybean market wasn’t alone on its raft as January soybean oil was down 0.33 cent and January soybean meal was sitting quietly with a loss of $0.10. A look at global oilseed markets and we see canola was down $1.40 to start the day while Malaysian palm oil finished with a 3.5% loss. We need to keep in mind noncommercial attention is in the process of turning from January issues to March contracts as the latest Goldman Roll comes to an end Thursday. From Tuesday-to-Tuesday, the March soybean contract (ZSH25) closed 3.0 cents higher while the carry in the March-May futures spread weakened by 2.5 cents. This makes it clear most of the buying this past week came from the commercial side as short-term demand, roughly through mid-January, remained solid for US supplies. However, national average basis was calculated at 50.75 cents under January futures Tuesday evening as compared to last Friday’s 49.5 cents under January. 

Wheat: As mentioned in the opening Summary, the wheat sub-sector was quietly higher early Wednesday morning. March Chicago (SRW) rallied as much as 4.0 cents overnight and was sitting 1.5 cents higher at this writing on trade volume of about 4,000 contracts. That isn’t much interest. I still consider activity in Chicago as noncommercial short-covering with the latest CFTC Commitments of Traders report showing Watson held a net-short futures position of 61,540 contracts. This was the largest net-short futures position since 62,900 contracts the week of April 16. Fundamentally, there isn’t much to get excited about. The National SRW Wheat Index ($CSWI) was calculated near $4.9950 Tuesday evening putting national average basis at 62.25 cents under March Chicago futures, still within sight of its previous 5-year low weekly close for this week of 70.5 cents under March. The Kansas City (HRW) issue was showing a gain of 1.5 cents to start the day on trade volume of about 2,100 contracts. Here Watson held a net-short futures position of 22,710 contracts before the March issue rallied 24.0 cents at yesterday’s close. March Minneapolis (HRS) was up 1.0 cent pre-dawn on overnight trade volume of about 800 contracts. Keep in mind the March-May futures spread now covers a bullish 32% cfcc.