DTN Midday Grain Comments 07/26 11:38
Beans, Corns Lower at Midday
Some warmer forecasts have beans seeing double-digit gains at midday.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are lower with the Dow futures down 45 points.
The interest rate products are flat to lower. The dollar index is 9 points
lower. Energies are mixed. Livestock trade has hogs mixed and cattle and
feeders higher. Precious metals are flat to higher.
Corn trade fractionally higher at midday and near the daily high; trade has
been slow with a range from around 4 cents lower to a penny higher. The day to
day price ranges should begin to lessen with heavy supplies weighing on the
market. Rains this week should help improve marketplace certainty that the corn
yield will hold up and we have a shot at a record yield. The weekly crop
condition report showed conditions unchanged at 76% good to excellent, and only
5% poor to very poor. The crop ratings a year ago were 6% worse at 70% good to
excellent, and two years ago crop ratings were also worse than this year,
around 73% good to excellent. The 2014 yield was our record at 171 bushels per
acre; so if crop ratings are the bar, we will see record yields this fall with
normal August weather. So let's expect some yield estimates ahead of the August
report, due out two weeks from this Friday, around 171-174 bushels per acre.
For today though, beans are providing spillover support to corn and the weather
forcasts are sugguesting that adding weather premium is warranted. On the
December contract support is the contract low at $3.33 1/4. Resistance is the
10-day moving average at $3.53; then the 20-day at $3.60.
Soybean trade is 12-15 cents higher with the market gaining back some of the
Monday losses. Meal is $5 higher and bean oil is up 25 points. Outside markets
are mixed. Soybean trade is adding back a little weather premium with some
warmer extended forcasts versus yesterday. The weekly progress and condition
report had conditions unchanged at 71% good to excellent, and 7% poor to very
poor. Progress numbers listed 76% of the crop blooming versus 66% on average,
and 35% setting pods versus 26% on average. The numbers supported the lower
futures trade over the past week. The USDA yield estimate could inch higher on
the August report based on the good condition of the crop. If yields would
rise, there is still a heavy supply side market picure ahead, plus 2017 acreage
would likely be up if soybean prices hold around or above $10. Seasonally the
bears get in control of the market late summer into the harvest season, so the
market needs to find a reason to change this seasonally otherwise the current
downtrend could hold into month end at the end of this week. On the November
soybean chart support is at the $9.63 3-month recent low, then the 200-day
moving average at 9.53, with resistance at the 10-day moving average at $10.27.
Wheat trade has not found follow-through buying off the strength yesterday
and is down 7-10 cents at midday. The heavy world and domestic supplies
continue to limit upside in wheat. Some buying wheat versus selling bean
spreading supported wheat the past week, but the fear of hot August weather
appears to have quickly scared some spreaders out of position today. The weekly
progress report had winter wheat 83% harvested versus 79% on average. Spring
wheat conditions were down 1 percentage point to 68% good to excellent, and 8%
poor to very poor. This was not a surprise and spring wheat should stay
supported versus winter wheat contracts. On the Kansas City December chart
support is the 10-day and 20-day moving averages around $4.42, with the 50-day
resistance at 4.74. The market is testing support at midday.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered trading adviser.
David Fiala can be reached at email@example.com
Follow David Fiala on Twitter @davidfiala
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