DTN Midday Grain Comments 05/18 11:27
All Grains Higher at Midday
Wheat leads at midday with sharp gains, with corn following suit, with
firmer soybeans as well.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are mixed with the Dow up 10 points. The
interest rate products are lower. The dollar index is 20 points higher.
Energies are mixed with crude down 0.20. Livestock trade is mixed. Precious
metals are mixed with gold up 1.50.
Corn trade is 7 to 8 cents higher at midday with trade firming back to the
high end of the range with the end of the sorghum tariffs and better trade
optimism. Wet weather is expected over the weekend for much of the western belt
with warm conditions returning after that. The second-crop areas of Brazil
should catch some showers to mitigate some stress but the crop size will likely
keep trending lower. Ethanol margins remain stable with the energy complex near
the upper end of the range, with Memorial Day demand just around the corner,
and futures edging back to $1.50. On the July chart we moved back through at
the 20-day at $3.99 1/2 with the next level of support is 50-day at 3.94 which
we tested to start the week, with resistance at the recent high at $4.08.
Soybean trade is 2 to 5 cents higher at midday with trade trying to
reestablish itself over the $10.00 area with support from grain offsetting the
large cancellations seen today with 949,000 metric tons of sales cancelled. We
did see 56,000 metric tons of old crop, and 112,000 booked as well today with
some fresh sales emerging with the break. Meal is flat to $1 higher and oil is
40 to 50 points higher. South America's recent pattern should remain intact
near term, with the ral and Peso remaining near record lows to boost export
competiveness, with harvest moving towards the home stretch in Argentina. Crush
margins have narrowed with meal some $30 a ton off the highs On the July chart,
trade is back below the 200-day at $10.16 with the next level of support the
recent low at $9.93.
Wheat trade is 11 to 20 cents higher with trade returning focus to US
weather issues and broader optimism about grain demand coming forward. The
dollar remains near the upper end of the range, crimping US competitiveness on
the world market until more milling quality wheat is available. Warmer weather
should help to boost maturity with the crop still well behind normal, with
further stress likely if not combined with rain, and the rain is not combined
with hail. Spring wheat should continue catching up with some acres likely
rolling to other crops as we get later in spring. The Black Sea area will
continue to dominate export trade with weather issues limited for the moment,
and better rain potential over the weekend. Black Sea values are moving back
towards $200 a ton. On the July Kansas City contract support is the 20-day at
$5.29 that we are back above with the upper Bollinger Band at $5.65 resistance.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered adviser.
He can be reached at firstname.lastname@example.org
Follow him on Twitter @davidfiala
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