DTN Midday Grain Comments 12/08 11:39
Corn, Beans Lower at Midday
Chart momentum turned to the defensive for beans; futures are nearly down 25
cents at midday.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are higher with the Dow futures up 65. The
interest rate products are lower. The dollar index is 80 points higher.
Energies are mixed. Livestock has cattle lower and hogs higher. Precious metals
are lower with gold up $5.
Corn trade is 7 lower at midday with downside momentum due to spillover
pressure from beans and the strong dollar. The dollar looks to be giving us an
outside day with a higher close possible which would be a bullish chart patter.
This is negative for exporting commodities. The weekly export sales number
though was higher than expected this morning at 1.495 million metric tons. We
have the monthly report tomorrow but no production changes will be on it, and
no major change for South American's production is expected. Demand has been
good, so flat to slightly lower carryover, very small net changes, are
expected. Chart support coming into today is now resistance in the $3.52 1/2 to
$3.54 1/2 area where we find the 10-day, 20-day and 50-day moving averages.
Support is now down at last week's low at $3.41 3/4.
Soybean trade is 24 cents lower at midday, meal is down $7 and bean oil is
down 75 points. We appear to be seeing pressure from long profit taking or
exiting here at midday despite some good sales numbers. Brazilian crop
estimates are rising even as weather issues linger for South Brazil and
Argentina, which may have some production ideas lower in Argentina. It is still
too early to be concerned. The 12-15 day forecast was showing some improvement
for Argentina but the models remain inconsistent. The dollar strength is the
biggest story which has market longs concerned. The weekly export sales were at
1.461 million metric tons. The monthly report tomorrow is expected to show
limited changes. On the January chart the 10-day at $10.20 1/2 is now support
with resistance at the $10.40 10-day then the $10.65 4-month high.
Wheat trade is 1 to 5 cents higher at midday with some light buying of wheat
with traders exiting spreads where wheat was the short leg against long corn or
beans. India dropping import duties until March which should help bolster
additional demand. Colder temperatures will have to be watched with limited
snow cover but moisture has improved for some areas with the recent systems.
This for sure appears to be limiting selling in wheat which is at some low
historic prices. Drops around zero or lower that can cause winter kill. The
demand for protein will continue to be key market mover on spread trade, and
the Southern Hemisphere harvest continues to move along well with Argentina and
Australia seeing good yields. The weekly export sales were in the upper half of
expectations at 503,100 tons. On the Kansas City March chart support is at the
$3.99 3/4 contract low printed Wednesday, resistance is at the $4.12 10-day
moving average which is the lowest major moving average.
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 Fiala on Twitter @davidfiala
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