DTN Midday Grain Comments 05/21 11:07
Grain Trade Mixed at Midday
Soybeans surge on trade optimism, with corn flat and wheat in retreat.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are firmer with the Dow up 280 points. The
interest rate products are mixed. The dollar index is 14 points higher.
Energies are mixed with crude up 0.50. Livestock trade is mixed with cattle
leading. Precious metals are mixed with gold down 3.00.
Corn trade is narrowly mixed at midday with trade giving back the early
gains due to spillover pressure from wheat. Warm weather should dominate the
week, with some rains still for the central and northern areas of the belt,
with Illinois and Missouri remaining on the dry side. The second crop areas of
Brazil are trending back drier in the near term. 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 $1.51 gallon. The
weekly crop progress report should show planting and emergence ahead of normal.
The weekly export inspections remained solid; they were at 1.52 million metric
tons. On the July chart we moved back above 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 18 to 20 cents higher at midday with trade gapping higher
with the trade progress made over the weekend. Meal is $1.50 to $2.50 higher
and oil is 25 to 35 points higher. South America's recent pattern should remain
intact near term, with the Real and Peso remaining near record lows to boost
export competiveness, with harvest moving towards the home stretch in
Argentina. Trade optimism is focusing on China's demand for soybeans and
related products, but crush margins have narrowed so far this morning. Weekly
crop progress is expected to remain well above normal. The weekly export
inspections were strong at 893,680 metric tons. On the July chart, trade is
back just above the 200-day at $10.16 with the next level of support the recent
low at $9.93, and the 20-day at 10.26 the next level of resistance.
Wheat trade is 4 to 10 cents lower at midday with the stronger dollar and
rains in Kansas bring selling back of the initial overnight trade higher.
Warmer weather should help to boost maturity with the crop still behind normal,
but catching up with another week of heat likely to add stress to the heading
crop. 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 but some
dryness so far. Black Sea values are moving back towards $204 a ton. Weekly
export inspections continue to be lackluster at 341,299 metric tons. Weekly
crop progress should be steady with the crop closer to maturity for winter
wheat, while spring wheat will remain behind normal. On the July Kansas City
contract support is the 20-day at $5.29 that we are testing this morning 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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