• Early Wednesday morning shows markets in the commodity complex posting familiar overnight patterns. 

• The Softs sector showed the largest cumulate gain again with solid rallies seen overnight in coffee, sugar, and cocoa

• The Grains sector was also quietly higher as of this writing. 

Morning Summary: If you enjoyed Tuesday’s early morning markets, then you’ll like Wednesday’s as well given they are generally the same. Gold is green again, this time around the clock showing April (GCJ25) rallied as much as $10 and sitting within sight of its session high at this writing. It’s interesting to note last week’s contract high of $2,968.50 continues to hold, with April reaching $2,959.00 through early Wednesday morning. The energies sector was mostly higher as well, with the outlier again being natural gas. Here, though, the selloff isn’t quite as sharp as yesterday at this time as the spot-month contract (NGH25) dipped as much as 6.0 cents (1.5%) overnight and was only fractionally lower as I type this out. US stock index futures were also showing a gain to start the day, following through on Tuesday’s higher close by all three major indexes. It’s interesting to note global stock indexes, looking at the close in Asian markets and early trade in Europe, were mostly lower. Being a cold February morning in the US, we could spend time in this sector with the Chicken-or-the-Egg Debate^[i]. It was more of the same in Softs as well with coffee, sugar, and cocoa all showing solid gains to start the day. 

Corn: The corn market is in one of those patterns where it starts the overnight session quietly lower, but by the time I fire up the quote screen early the next morning the market is usually glowing green again. Such is the case today as contracts are showing fractional gains on generally light trade volume. March posted a 3.0-cent trading range overnight, from up 1.75 cents to down 1.25 cents on trade volume of about 18,000 contracts. It was a similar story in May (ZCK25) as it also posted a trading range of 3.0 cents while registering 16,000 contracts changing hands. Switching to fundamentals, the National Corn Index was calculated near $4.7050 Tuesday evening, up roughly 6.25 cents for the day. Recall March finished with a gain of 5.75 cents while May closed 7.0 cents higher Tuesday. This tells us basis firmed against the nearby contract but weakened against the deferred issue with my calculations coming in at 31.5 cents under March and 45.25 cents under May futures. The previous 10-year low weekly close for this week is 41.75 cents under the nearby contract while the previous 10-year low weekly close the first week of March is 40.75 cents under the deferred issue. Lastly, May closed 17.75 cents higher from Tuesday-to-Tuesday. 

Soybeans: The soybean market was quietly in the green pre-dawn, a slight departure from yesterday at this time when contracts showed small losses, also on quiet trade. The March, May, and July issues were all sitting 2.25 cents higher at this writing on trade volume of 9,700 contracts, 10,700 contracts, and 5,200 contracts respectively. For the record, March added as much as 3.0 cents overnight and May 2.75 cents, neither indicating much interest from Eastern Hemisphere buyers. We’ll see how the rest of the morning plays out. From Tuesday-to-Tuesday the May issue closed 4.75 cents lower hinting at continued pressure from the noncommercial side, indicating the net-futures position could be near par in the next CFTC Commitments of Traders report (legacy, futures only). Last Friday’s update showed funds held a net-long of 6,780 contracts, a decrease of 30,385 contracts from the previous week. May (ZSK25) closed 27.75 cents lower that week from Tuesday-to-Tuesday. Fundamentally, the National Soybean Index was calculated near $9.7550 Tuesday evening, up 2.5 cents for the day. Recall March closed 2.5 cents higher Tuesday with May showing a gain of 2.75 cents. This put my national average basis calculations at 63.0 cents under March and 82.0 cents under May, both still indicating a weak market historically. 

Wheat: The wheat sub-sector was also in the green early Wednesday morning on follow-through buying from Tuesday’s close. Trade volume wasn’t heavy in any of the three markets, leaving the door open to anything as we move toward intermission later in the morning. May SRW rallied as much as 3.5 cents overnight and was one tick off that mark on trade volume of about 7,000 contracts. May HRW added as much as 3.25 cents and registering 2,000 contracts traded and was sitting 2.75 cents higher, while May HRS was up 3.0 cents and on its session high with 700 contracts changing hands. While I still don’t see a fundamental reason for the rally, all three markets continue to climb nonetheless. This puts the spotlight on short-covering by Watson given funds were reportedly holding net-short futures positions across the board as of a week ago. The latest Commitments of Traders report showed 9,090 contracts of HRS, 10,030 contracts of HRW, and 55,940 contracts of SRW. While we know the world is not going to run out of wheat any time soon, we don’t know what “deals” are being made as the US talks to Russia while leaving Ukraine (and Europe) out of the ongoing “peace” negotiations. 

^[i] Do global stock indexes follow or lead US markets.