DTN Midday Grain Comments 07/02 11:26
Grain Futures Mostly Higher at Midday
Trade is mostly higher at midday with a short-covering tone as we head
toward our noon close.
By David Fiala
DTN Contributing Analyst
U.S. stock markets are lower with the Dow index down 20 points. Interest
rate products are lower. The dollar index is 29 points higher. Energies are
higher with crude up $.80. Livestock trade is mixed. Precious metals are mixed
with gold down $6.
Corn futures are 4 to 6 cents higher at midday with short-covering and trend
buying seen ahead of the long Fourth of July weekend. Ethanol margins are under
pressure for producers and blenders with firmer corn, ethanol, and weaker crude
oil prices, but this is increasing DDG values. Now that we held on to
post-report gains, some short-covering may again be seen near the close due to
margin calls. The CME also raised margin requirements after the report, giving
additional short-covering bias here. Weather forecasts do not look too
concerning as an aggregate with normal to below normal temperatures and some of
the wettest areas are starting to dry out. The weekly export sales were OK at
594,300 metric tons, and new crop was 238,900 metric tons. On the December
chart support is at the 200-day moving average at $4.02 versus our $4.37 midday
market. Resistance is at the $4.40 December high then the $4.50 12-month high.
Grains close at noon and reopen Sunday night.
Soybean futures were narrowly mixed most of the morning but are 2 to 5 cents
higher at midday; meal is $1 to $2 higher and oil is 30 to 40 points higher.
Drier forecasts should support some late planting this weekend. The
lower-than-expected June 1 stocks were the biggest surprise this week noted for
our big gains. Market bears should be arguing next week that this approximate
$1.50 rally is pricing in unplanted acreage and the good usage so far this crop
year. Ending stocks estimates will be expected to drop on the July Supply &
Demand report, but they will remain historically a record high globally and
comfortable domestically. Trade should be active going into the long weekend;
it is likely we may see at least one upside short-covering run yet. The weekly
export sales were a bit soft at -10,300 metric tons old crop and 127,500 metric
tons of new. On the November chart the 200-day moving average at $9.71 is
support with $10.56 3/4 resistance which is our 10-month high.
Wheat futures are 3 to 5 cents higher across the three exchanges this
morning with the firmer row-crop trade helping to limit the long liquidation
seen this morning. Harvest should pick up the pace over the weekend. The weekly
export sales were soft at 363,900 metric tons with ample world supplies
limiting U.S. export business. On the September KC wheat chart support is at
the $5.79 200-day with limited resistance to note other than the high yesterday
at $6.11. The major high is the December 2014 high just above $7.
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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