Morning Summary: It’s quite possible traders will have this song playing repeatedly over the course of Tuesday session (and if so, most likely the brilliant Ray Charles version) given the Georgia Senate runoff election taking place today. There are two seats up for grabs since no candidate won more than 50% of the vote this past November, two seats that will not only decide the major party in the Senate but could greatly alter the balance of power in the US government. If such a thing exists anymore (a subject of an upcoming Weekly Column titled “Corporate America”). Watching the VIX (volatility index) associated with US stock markets Monday, it was hard to get a good read on which side was favored heading into Tuesday. The US dollar index was under pressure again overnight while US stock index futures turned green. Energies and metals were also higher to start the day, the bigger moves posted in energies early. US treasuries were lower again, though the March 30-year T-bond continues to hold above the markets recent low of 169-16. Cotton found renewed buying interest overnight despite recent light pressure from the commercial side of the market. Which brings us to grains and oilseeds…

Soybeans: If you are suffering from whiplash following Monday’s action in the soybean market, I understand. The market saw a classic case of first of the year producer selling, creating a round of commercial pressure that dropped the market almost 50 cents from its high before staging a late session comeback. Overnight through early Tuesday morning saw the market post another strong 20-cent plus rally with contracts near session highs as of this writing. The difference between Monday and Tuesday is the sell orders that initially hit the market are now gone, with the next round likely at higher levels. We also know there was some cash soybeans being sold Monday by looking at the daily chart for the cmdty National Soybean Basis Index, calculated at 49.1 cents under March futures. Recall from Monday in this space when I talked about last week’s calculation versus March was theoretically 42.2 cents under. This would suggest a one-day collapse in national average basis, something we need to keep a close eye on as January lengthens. Yes, futures spreads remain bullish but we need to keep in mind Grains’ Golden Rule a friend of mine used to always talk about, “First basis, then spreads, then futures.”

Corn: The corn market was higher to start the day on solid trade volume. March was up about 3 cents, just off its overnight peak of a 4-cent gain, showing trade volume of 33,100 contracts. Though volume for both May (9,800 contracts) and July (6,600 contracts) was lower, we still see signs of possible commercial selling in corn. Monday’s action was similar to what I talked about in soybeans, with first of the year cash selling taking advantage of the strong overnight rally. Unlike soybeans, though, there is likely more corn still waiting to be sold so selling could be seen on any sizeable rally. A side note: It will be interesting to see what number USDA comes up with in its Quarterly Stocks report, as of December 1, set for release on January 12 (if the US government is still running at that point). National average basis firmed Monday with the cmdty National Corn Basis Index calculated at 17 cents under March futures as compared to the previous Thursday’s calculation of 17.2 cents under. And while the market’s cost of carry table is still showing mostly red, the nearby March-May futures spread did dip back into the green (a carry) at Monday’s close.

Wheat: The wheat complex was back at it again overnight as all three markets posted solid gains. Leading the way was Chicago (SRW) where the nearby March issue rallied as much as 10.75 cents on moderate trade volume of 10,200 contracts. While early indications are some of the support came from commercial buying, given the stronger inverse in the March-May futures spread, the May issue showed volume of only 3,300 contracts. Minneapolis (HRS) followed Chicago at a slight distance with March gaining as much as 7.75 cents on volume of 330 contracts. However, March Minneapolis was sitting at its session high as of this writing versus the Chicago contract being off its high by about 2 cents. Kansas City (HRW) showed a smaller rally on moderate-to-light trade volume with the March issue up 5.50 cents. Both old-crop and new-crop futures spreads were flat indicating most of the support came from the noncommercial side of the market. Look for the wheat complex to be a follower again Tuesday, though this time around I’m not looking for it to dip into the red. But we are talking about wheat, meaning the unexpected should be expected any day, every day.