DTN Midday Grain Comments 10/24 11:10
Grain Futures Lower at Midday
Grain trade is lower across the board at midday due to noted hedge selling
ahead of a big harvest weekend.
By David Fiala
DTN Contributing Analyst
U.S. stock market indices are higher with the Dow futures up 50 points.
Interest rate products are lower. The dollar index is 16 lower. Energies are
lower with crude down $1.00. Livestock trade is mixed. Precious metals are
mixed with gold up $2.
Corn futures are 3 to 5 cents lower at midday, which is over a dime off our
overnight high. Nearby December reached the highest level in about 8 weeks
early this morning. The firmer weekly trend has been bringing in more light
speculative buying and short-covering, but at midday the bears have the
momentum. Fundamentally the big yields are keeping shorts confident and
producers still are reluctant sellers and gaining confidence with the firming
market this month. So it could still be a mixed battle yet before October is
over; but in the big picture this has been a bounce in a downside large move.
It appears normal hand-to-mouth type demand has helped the market rally this
week with few willing fresh sellers. The large crop size and expected higher
supply side numbers on the November crop report, due out two weeks from Monday,
should still weigh on trade. Producers should be viewing current prices -- July
futures reaching the $3.90-$4 range -- as a good hedge zone. The overnight high
was nearly 50 cents off our lows printed at the beginning of October. December
chart support is at the $3.53 10-day average, then the $3.42 20-day average.
Resistance is in the area of the early September high around $3.65 to $3.67,
which is where the market stalled overnight. The next major moving average to
the upside is the 100-day at $3.86.
Soybean futures are 6 to 10 cents lower, meal is down $3 to $4 and bean oil
is 20 to 30 points lower. Soybeans should expect good harvest progress this
weekend so hedge selling may keep the market under pressure this afternoon.
Fundamentally the market is looking at a well-supplied market which should
limit upside. We can afford some South American weather problems, albeit the
market will firm on such news and farmer selling domestically may be stubborn
on rallies with higher prices wanted. The big weekly soybean sales number
Thursday illustrates demand remains great. November beans moved over $10
overnight before setting back, up to $10.02, which has been our area of
resistance. This is 98 cents up from our early October low; market bears argue
this is enough of a retracement bounce. On the November chart the 50-day at
$9.83 is nearby chart support, then the 20-day at $9.45 with nearby resistance
in the $10.02-10.04 area. The next major moving average to the upside is the
100-day at $10.83.
Wheat futures are mixed at midday with spillover from the row crops dragging
wheat from the higher levels seen overnight. Wheat upside momentum has stalled.
The firming dollar and limited U.S. export business is limiting fundamental
support here. The weekly sales number was below expectations Thursday morning,
which is limiting optimism today. Weather remains neutral globally with some
trouble spots worldwide, especially in Australia. U.S. winter wheat planting
progress is normal and early conditions should be good as it goes into dormancy
this year in comparison to the average. On the December KC chart, wheat has
support at the 10-day at $5.99 and resistance in the $6.25 to $6.32 area.
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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