DTN Midday Grain Comments 08/16 11:40
All Grains Higher at Midday
Firmer midday trade is seen with soybeans leading the way upon trade optimism
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are higher with the Dow futures up 360. The
interest rate products are weaker. The dollar index is 19 points lower.
Energies are mostly higher with crude up 0.40. Livestock trade is firmer with
nearby hogs limit up. Precious metals are higher with gold up $2.50.
Corn trade is 4 cents higher at midday with spillover support mostly from
beans. The range has been a penny lower to just over a nickel higher. Last
night news that trade negotiations with China were expected and optimism toward
buying beans helped spark a quick 20 cent rally in beans. Market bears argue
this is still part of the game, and the big bearish supply side market
fundamentals are taking prices lower on its own. The lower prices are finding
the demand, not some good will toward negotiations. The market knows China
likes U.S. beans. The weekly ethanol report yesterday was mixed with production
down 28,000 barrels per day, with stocks up 94,000 barrels, with margins
continuing to stay narrow. Corn basis will likely continue to fade with more
harvest activity building with the advanced crop and with the higher board. The
weekly export sales were good at 339,000 tons of old crop and 1.044 million
tons of new. On the December chart futures have support at the $3.66 low scored
on Monday as follow-through selling after the bearish WASDE report. Resistance
is at the $3.88 1/2 two-month high.
Soybean trade is 20 to 27 cents higher at midday, meal is up $5 to $6 and
soybean oil is up 30 points. Some of this strength is short covering and chart
related with shorts that piled on after the bearish USDA report on Friday,
getting out with losses. We moved above the 10-day and 20-day moving averages,
in between $887-889 on November beans, which turned the chart positive. The
optimism toward China demand is the talk, but I think we need to expect a long
game. The weekly export sales were okay at 133,400 tons of old crop and 571,600
tons of new. Meal sales were 207,200 tons of old and 147,300 tons of new with
bean oil 4,800 tons of old and 300 of new. On the November chart support is at
the $8.89 10-day, then down at the $8.51 one-month low printed on Monday.
Resistance is the $8.99 1/2 early morning high then the $9.22 2-month high.
Wheat trade is 8 to 13 cents higher at midday with trade looking to reverse
from the post-report weakness. Spill over support from the row crops along with
a good weekly sales report is noted for the higher trade. Spring wheat harvest
should continue to move along at a good clip. The strong US dollar is keeping
the U.S. less competitive on the world market with the ongoing issues with
Middle Eastern importers focusing on the Black Sea for origination. Matif wheat
solidly higher this morning, giving us support as well. Australia remains on
the dry side with the crop pace ahead of normal as well with some relief for
some areas. The weekly export sales were good at 803,000 tons giving the market
support. On the December KC chart we have support at the low printed yesterday
at $$5.60 3/4 then the 100-day at 5.55, with resistance the 10-day at 5.89. We
are flirting with the 20-day at midday which is at $5.76.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered adviser.
He can be reached at firstname.lastname@example.org
Follow him on Twitter @davidfiala
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