DTN Midday Grain Comments

General Comments

The U.S. stock market indices are weaker with the Dow 40 lower. The dollar index is 6 higher. Interest rate products are mostly weaker. Energies are weaker with crude 1.40 lower. Livestock trade is weaker. Precious metals are mostly firmer with gold 8.10 higher.

CORN

Corn trade is 4 cents higher at midday with trade seeing early light selling before turning back higher, remaining just below the contract highs. The forecast looks to continue the recent pattern into the next week, likely finishing late planting in some areas. The weekly ethanol numbers showed production 52,000 barrels higher, to 1.096 million, third-highest on record, with stocks down 751,000 barrels, which has pushed ethanol futures back over 1.52, but margins remain poor. The monthly USDA WASDE report Tuesday morning showed the USDA corn yield estimate at 166 BPA, down 9 bushels from May, with old-crop carryout at 2.195 billion bushels, up 100 million in line with expectations. The new-crop carryover was at 1.675 bb down 800 million from last month, which was around 100 million below expectations. World stocks dropped as well, down around 12 million metric tons. South American production was just about expectations at 101 million metric tons from Brazil, and 49.0 on Argentine production. Overnight we were lower, but rebounded a dime with our daily highs within a few cents of the contract highs. Expect buy stops above the market. The bold USDA move to drop the yield 10 bushels an acre on the June report is a message of yield uncertainty due to this historic wet spring. This uncertainty creates volatility, so many expect daily ranges to stay around a dime or more. On the July nearby chart, support is the $4.09 20-day moving average with trade back above the 10-day at 4.24, with the $4.38 high resistance.

SOYBEANS

Soybean trade is 20 to 22 cents higher with buying on thoughts of eventual acre losses even as demand remains soft. Meal is $7.50 to $8.50 higher and oil is 30 to 40 higher. Crush margins remain solidly positive overall with meal above $320. South American currencies have firmed as they control the world export business, which remains limited with the swine fever concerns. Field work should expand in many areas into midweek especially in the west before rain returns. The corn/soybean ratio has been more stable here as more crop insurance days pass. The WASDE report had yield at 49.5 BPA, with old crop carryout at 1.07 billion, up 75 million, and new crop at 1.045 billion, up 75 million from last month, both just above expectations. World carryout was just a tick below expectations on old at new crop at 112.8 million on both years, with Argentina and Brazil production down slightly at 56 million and 117 million metric tons respectively. The July chart support is the 50-day at $8.65, with next resistance the 100-day at 8.97.

WHEAT

Wheat trade is 2 cents lower to 8 cents higher with winter wheats leading trade. The Kansas City/Chicago spread pushed to new highs at 62 cents with HRW harvest expanding. The heavy rains are slated more for the north and east parts of the belt while harvest should build more on the plains. The dollar rally seems to be fading again. Hard red wheat is working into feed rations in some areas with the bounce in corn values, and reduced quality may increase feeding on that front. The WASDE report had old crop carryout at 1.102 billion, down 25 million bushels, with new crop at 1.072 down 69 million bushels from last month, on 1.093 billion production up just slightly from last month. World stocks were 276.6 million metric tons on old crop, up slightly, and 294.3 on new, also up slightly. On the July Kansas City chart, support is the 20-day at 4.44, with the 100-day at $4.55 as resistance, which we are above at midday then the 10-day at 4.63, which we have tested.

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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