DTN Midday Grain Comments 05/06 11:28
All Grains Higher at Midday
Wheat is the upside leader at midday with double-digit gains; dollar
weakness is generating short profit taking.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are lower with the Dow index down 50 points.
The interest rate products are lower. The dollar index is 90 points lower.
Energies are mixed. Livestock trade is mixed with cattle lower and hogs higher.
Precious metals are lower with gold off $5.
Corn trade is 2 to 3 cents higher at midday; May futures have been up as
much as 8 cents. We have no carry in between May and July, illustrating slow
farmer movement at the lower board prices. We are in May but no deliveries have
been seen with the next available position/delivery date in November. So
although we have a bearish big picture fundamental argument the strong basis
and carry out of the nearby market reminds of a great demand picture. Outside
markets are supportive. Weather looks to keep the western belt damp in the near
term, but with planting progress advanced past 50% it should be viewed as just
as much of a benefit to production than a hindrance at this point. The weekly
ethanol production report showed production down 3.69% and stocks down 0.17%
with gas demand down 1.51% on the week. This has nearby ethanol futures up
nearly 3 cents at midday. On the July chart we put in a new low for the move
Tuesday at $3.55 which is support with $3.46 3/4 the next level below that
which is the contract low printed on October 1. Resistance is at the 20-day at
Soybean trade is 1 to 2 cents higher at midday with spillover support from
corn and wheat, meal is fractionally lower and bean oil steady to 5 lower. The
bean oils strength is the biggest friendly item this week with concerns about
strikes in Argentina. Crush margins have improved from the uptick in protein
oil values albeit margins are slightly lower at midday. Bean oil deliveries on
the May contract were light at 333, but this is limiting upside following the
large move up this week. The export market overall has been fairly quiet this
week. The west will be slow in planting this week, but the south and east
should pick up additional progress. On the July chart support is at the $9.82
50-day with resistance at the $9.97 1/2 early April high, then the $10.09
100-day moving average.
Wheat trade is 12 to 14 cents higher at midday and near the daily highs
albeit momentum appears to have cooled. The dollar weakness is generating
support and the Kansas Wheat Tour is showing yields. The weather with rains on
the Plains is viewed as positive for crop development but increased disease
concerns could pop up. The Kansas Wheat Tour had yields roughly a half bushel
below last year's over the same area. Ongoing demand concerns will need to be
eased to support a further rally near term. The July Kansas City contract has
chart resistance at the 10-day moving average at $5.02 which we are flirting
with at midday. Support is at the contract low printed Tuesday morning at $4.85.
David Fiala is a DTN contributing analyst and the president of FuturesOne
and a registered Trading Adviser.
David Fiala can be reached at firstname.lastname@example.org
Follow David Fiala on Twitter @davidfiala
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