DTN Midday Grain Comments 05/28 11:21
Grain Trade Mixed at Midday
Grains are seeing mixed slower action with limited fresh news up to midday.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are lower with the Dow index down 50. The
interest rate products are mixed. The dollar index is 2 points higher. Energies
are mixed, crude is down 0.35. Livestock trade is higher to sharply higher.
Precious metals are mixed with gold up $3.
Corn trade is 3 to 4 cents higher at midday with light short profit taking
and end-user buying noted. Ethanol margins remain OK with ethanol up with corn
this morning. The weekly EIA report showing an ethanol production increase of
1.15%, a stocks decrease of 1.65%, with gasoline demand 5.1% higher. Seeing
steady to higher weekly production numbers and lower stocks numbers are
supporting factors for corn. Rains move back in over the next few days ending
the brief bit of warm and sunny weather. Considering we moved to some new lows
this week, selling is limited; overall production ideas are good with initial
2015 aggregate ratings this week showing zero percent very poor and 74% good to
excellent, but we still need to grow this 2015 crop. Use is good and if farmer
selling remains reluctant due to lower prices, the market should see some
bounces. On the December chart resistance is at the 10-day and 20-day moving
averages both at $3.78 with support at the $3.65 1/4 low printed overnight then
the $3.64 1/2 contract low printed nearly eight months ago. So basically we
found support at the contract low today. It is just early in the growing season
for selling interest to be around fresh contract lows, but we should expect
sizeable sell stops below the low if we go there before the week is out.
Soybean trade is 2 to 4 cents lower at midday due to light selling beans
buying corn spreading and no fresh supportive news. Meal is $3 to $4 lower and
bean oil is 15 to 25 points higher. Old crop commercial demand remains good,
which is limiting downside, but we still printed a fresh nearby contract low
this week. Additional fund pressure should not be a surprise near term if we
remain below all major moving averages. The July 10-day is at $9.39
representing nearby chart resistance and the lowest major moving average. Wet
weather will continue to limit soybean planting in some areas, this is
friendly, but with 61% of the crop noted as planted this week versus the 55%
average, concerns are limited. Meaning the market is okay if 20% of the crop
may be planted late; the market by next week will just likely want to see
forecasts that will allow the planting to be completed. If not the board may
see a bounce. On the November soybean chart the 10-day at $9.19 is resistance
with support at $9. If we cut through $9 easily before the week is over expect
some long liquidation to most likely give us some active trade. Meaning expect
some larger sell stop orders below the physiological $9 level; we are just
above here at midday, the market has inched to another new contract low.
Wheat trade is flat to 3 cents higher at midday with trade trying to
stabilize after the recent break. The dollar rally has cooled off, but is
generally holding strength. Excessively wet weather in the U.S. and hints of
dryness elsewhere will continue keep a level of support out there, but that
hasn't been the market focus this week. The world wheat weather has seen some
improvement to the forecasts, but issues look to remain for now. On the KC July
chart support is at $5, then the $4.85 contract low with resistance at the
20-day moving average of $5.20.
David Fiala can be reached at firstname.lastname@example.org
Follow David Fiala on Twitter @davidfiala
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