DTN Midday Grain Comments

Wheat, Beans Lower at Midday

David M Fiala
By  David Fiala , DTN Contributing Analyst
(DTN photo by Nick Scalise)

General Comments

The U.S. stock market indices are flat to slightly higher in quiet trade with the Dow up 20. The interest rate products are lower. The dollar index is 13 points lower. Energies are firmer with crude up 0.25 cents. Livestock trade is mixed. Precious metals are mixed with gold down $.50.

CORN

Corn trade is mixed at midday with trade mostly holding the post-report gains with spillover pressure from soybeans this morning. Forecasts remain in flux with heat and rain featuring for most with heat looking to intensify into the weekend as well as the following week. Harvest should continue to expand in the double-crop areas of Brazil. The weekly ethanol report showed production 12,000 barrels per day higher, with stocks 278,000 higher which has ethanol futures slightly lower post report. Basis has been flat to firmer in recent days with the lower board. On the WASDE report, old-crop carryout came in 80 million bushels below expectations at 2.102 billion bushels, and new crop 105 million bushels below at 1.577 billion. World stocks were 192.7 million, down 2.2 million on old crop, and 154.7 on new, down 4.5 million. Yield was left unchanged at 174 bpa, and 14.04 billion total production. On the July chart we remain below the 200-day, at $3.82 which is now nearby resistance and then the 100-day at $3.89. Nearby support is the $3.66 3/4 fresh 4-month low scored Monday.

SOYBEANS

Soybean trade is 10 to 14 cents lower with continued trade concerns weighing on the market with early gains quickly failing overnight. Meal is $3 to $4 lower and oil is 5 to 15 higher. Crush margins remain positive with meal now $50 off the highs. Bean basis has remained steady, with trade likely to remain quiet in the near term as old crop exports remain slow. Brazil continues to move bushels as they move post-harvest with CONAB estimates up 1 million metric tons from last month. The USDA announced 177,000 metric tons of soybeans sold to unknown. On the WASDE report, domestically old-crop carryout was 505 million bushels, down 25 million from last month, and new at 385 million down from 415 last month with world stocks at 92.5 million metric tons, up 0.3 from last month, with 87.0 million, up 0.3 from last month. On the July chart, trade is back below all the major moving averages with the 20-day at 10.09 the first level of resistance with support at the new low of $9.34.

WHEAT

Wheat trade is 7 to 16 cents lower at midday with trade failing to hold the gains from yesterday with notable bear spreading on the front months today. Warmer weather should allow early harvest to progress quickly with the lagging maturity catching up with the continued warm weather which tends to limit yields but early protein numbers remain average to strong with some better yields in eastern Kansas. Harvest pressure should build further this week. Spring wheat should see better progress with warmer weather helping to catch up emergence along with more rain. Australia should see some improvement but overall remains mixed. The Black Sea remains on the dry side near term, with Russian spring wheat weather remaining mixed with improvement in the Ukraine. HRW basis has improved ahead of the anticipated harvest protein improvement. On the report, domestic carryout was up 10 million bushels to 1.08 billion, with new crop at 946 million, down 9 million from last month. World stocks were slightly higher at 272.4 million metric tons, up from 270.5 last month, and new at 266.2, up 1.9 from last month. On the July Kansas City, we are back at the 10-day and highest major moving average at $5.39; next resistance is the upper Bollinger Band at $5.65. Support is the $5.31 50-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 him on Twitter @davidfiala

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David Fiala