DTN Midday Grain Comments 05/22 10:56
Grains Mixed at Midday
Corn is flat to 2 cents higher, soybeans are 6-8 cents higher and wheat is 3
to 6 cents lower. Outside markets are mixed.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are weaker with the Dow 35 points lower. The
interest rate products are weaker. The dollar index is 3 higher. Energies are
weaker. Livestock trade is mixed. Precious metals are mixed.
Corn trade is flat to 2 cents higher at midday. Trade has rebounded from the
overnight profit-taking with the wet forecast still in place and user margins
continuing to compress. Wet weather is expected to remain in place for much of
the western and central Corn Belt, keeping the pace slow. Warming temps will
help emergence in spots. Ethanol margins have faded on the more expensive corn
and ethanol futures unable to keep pace even with some improvement. The weekly
report shows production 20,000 barrels per day higher and stocks 1.154 million
barrels higher. Basis has seen selling pressure from farmer movement. On the
July nearby chart, support is the 200-day at $3.86 3/4 with the 100-day at
$3.81 below that. The next level of resistance is the upper Bollinger Band at
$3.92, which we are back above at midday, and then the recent high at $4.00.
Soybean trade is 7 to 9 cents higher with trade bouncing back from the
weakness Tuesday. Everyone is waiting for more clarity on the rumored $2.00
trade aid and if it will be tied to 2019 production. Meal is $3.50 to $4.50
higher and oil is 10 to 20 points higher. Crush margins remain solidly positive
overall with meal still remaining below $300. South American currencies remain
cheap at the end of harvest, with the export wire quiet this week. Fieldwork
should generally remain slow in the near term, but more progress is likely into
next week with little incentive for farmers to push right now along with acres
possibly shifting to corn or milo with the corn soybeans ratio the narrowest in
eight years if the government doesn't pay to keep them in beans. The July chart
support is the $7.98 lower Bollinger Band with the $7.91 low below that.
Resistance is the 10-day at $8.22, which we are just above, with the next round
the 20-day at $8.35, which we have tested but failed to hold.
Wheat trade is 3 to 7 cents lower with KC trade leading. Spreads continue to
move back to favoring the higher-protein wheats with wet weather concerns and
less spillover support from outside markets. Europe and the Black Sea area will
be watched with dryness in the Volga Valley expected to be eased in the near
term and wet weather in the U.S. potentially limiting planting and causing
disease issues in winter wheat. The dollar remains range bound. Hard red wheat
is working into feed rations in some areas with the bounce in corn values. On
the July KC chart, support is the 50-day at $4.27 with the 100-day at $4.63 the
next round up.
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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