DTN Midday Grain Comments

General Comments

The U.S. stock market indices are lower. The interest rate products are lower. The dollar index is 11 points lower. Energies are lower with crude down $0.40. Livestock trade is higher. Metals are mixed. Copper lower, gold & silver higher, platinum lower and palladium higher. Gold up $16.

CORN

Corn trade is 6 higher at midday and we have been up as much as 8 cents which challenged chart resistance and took us near the three-month high. Some Argentine weather concerns and spillover support from soybeans has provided support along with a sharply lower dollar. The weekly export inspections were neutral at 888,009 tons, but the lower dollar has more export optimism around. The South American weather is noted as supportive due to warmer dryer weather forecast for this week and next after wetter than expected weather over the weekend in the saturated areas. Warmer weather will be good for some of Argentina but southern areas remain dry and will see stress; so weather is argued to be only mixed by market bears. Ethanol is back up 2 cents at midday but the drop in price this month has hurt ethanol margins. China is expected to raise their import tariff on ethanol from 5% to 30% in March which is limiting optimism toward ethanol production profitability as it is expected to hamper exports. On the March corn chart support is at the $3.59 10-day moving average then the 20-day at $3.55. Resistance is at the $3.66 1/2 January high printed this morning, then the $3.69 6-month high followed by the $3.70 200-day moving average.

SOYBEANS

Soybean trade is up 25 cents at midday on nearby trade; new crop is only up 6 cents. Meal is up $16 a ton on nearby trade and bean oil is down 4. The weekly export inspections number was friendly coming in at 1,409,376 tons which is also providing midday support along with big chart buying that started on Thursday following friendly USDA numbers. This had market shorts on the ropes with margin calls, so short covering is part of this strength along with new chart buying. Last night into this morning, a sharply lower dollar lent support to the complex along with some additional new concerning South American weather. Agronomist Michael Cordonnier lowered his Argentine production forecast to 51 from 55 million metric ton; the USDA number last Thursday was 57 million tons. The weather is receiving attention and lower production estimates are a reality for Argentina; but Brazilian outlooks still look good. On the March soybean chart support is at the 50-day and highest major moving average at $10.24. Resistance was at the $10.74 six-month high printed in late November; but we moved up to $10.75 this morning. So here at midday and into this afternoon we are at an important chart point; will this be a double top, or short covering push us to new daily and new six-month highs? The next level of resistance would be the $11 area; then the March futures high last June was $11.35.

WHEAT

Wheat trade is 8 higher in Chicago; Kansas City is up 5 and Minneapolis up a penny in corrective action. Spillover support from the row crops and weak dollar is noted for the higher trade. The weekly export inspections were only 344,436 tons. The USDA numbers were mixed last week but the row crops pulled wheat higher which continues today. The lower dollar should help support exports, but we need to see the business. Talk about longer term lows and whether or not they have been printed is a topic on the minds of longer term shorts that could give us more upside this week if the cover. Egypt's GASC bought 235,000 tons of wheat, but Russian and Romanian origin. March Kansas City chart support is at the $4.29 100-day moving average, resistance is at the $4.60 200-day moving average.

David Fiala is a DTN contributing analyst and the President of FuturesOne and a registered adviser.
He can be reached at dfiala@futuresone.com
Follow Fiala on Twitter @davidfiala

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