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DTN Midday Grain Comments     02/10 11:33

   Grains Trending Quietly Mixed at Midday

   Quiet midday trade with the market still digesting the mostly neutral 
monthly USDA reports released 24 hours ago.

By David Fiala
DTN Contributing Analyst

 General Comments

   The U.S. stock market indices are higher with the Dow futures up 50 points. 
The interest rate products are mixed. The dollar index is 25 points higher and 
in an inside trading session following the move to a new 3-month low on 
Tuesday. Energies are narrowly mixed. Livestock trade is mixed. Precious metals 
are lower with gold down $5.


   Corn trade is a penny lower at midday; the overnight up to midday trading 
range is only 2 1/2 cents. This narrow range is illustrating the neutral 
reaction to USDA monthly report. The USDA provided a few changes on the WASDE 
yesterday leading to a 35 million bushel increase in the carryover versus the 7 
million increase average expectation. The domestic carryover was raised to 
1.837 million bushels. The export number was dropped by 50 million bushels, 
imports raised by 10 and ethanol usage raised by 25 million to reach the 35 net 
increase in our carryover. The world ending stocks came in at 208.81 million 
metric tons versus 208.1 expected and 208.94 on the January report, the range 
of expectations was 203.5-210 million tons. Argentine production was raised by 
1.4 million tons and Brazil by 2.5 million tons giving us a material increase 
in production but usage was increased to offset the added production giving us 
the fairly neutral monthly USDA report. As limited as the changes were on the 
report, the result is a growing supply side fundamental trend which keeps the 
longer term bear argument in control for the rest of the month.  On the March 
chart the $3.67 area is resistance where we find the 10-, 20-, and 50-day 
moving averages. Support to note is the $3.59 1/4 low yesterday and this 
morning then the $3.48 1/2 contract low. 


   Soybean trade is a penny lower at midday, similar to corn action has been 
lethargic with nearby futures seeing less than a nickel trading range overnight 
up to midday. Meal is $1 to $2 lower and bean oil up 25 points. Our midday net 
changes appear to be in reaction to outside markets and the neutral USDA 
February numbers. The USDA February domestic carryover came in at 450 million 
bushels which was 5 million more than expected and 10 million more than January 
due to a 10 million bushel drop in the domestic carryover.  The world carryover 
came in at 80.42 million metric ton versus 79.1 million metric tons expected 
and 79.28 last month; this was still within the 76.4-81 MMT range of 
expectations. The light surprise on the report was Argentine production was 
raised by 1.5 million tons and Brazil unchanged versus a small decrease 
expected. This lowers chances for a rally/recovery but we can also argue the 
pressure the few sessions going into the report priced-in the small negative 
aspect of the higher than expected domestic and world carryovers. On the March 
soybean chart support is at the $8.52 early January low. Resistance is at the 
$8.72-6 area where we find the 10-day and 20-day moving averages.  


   Wheat trade is mixed with Minneapolis a penny lower, Kansas City up 2 cents 
and Chicago up 4 cents at midday. Mixed trade has bene seen; the midday 
momentum is slightly higher so the market appears to be shrugging off the 
negative USDA numbers with interest on exiting shorts, taking profits, due to 
the fact the market is so low. On the report yesterday the domestic carryover 
was raised by 25 million bushels, 20 million more than expected to 966 million 
bushels due to a 25 million bushel drop in the export projection. US 2015-16 
exports are now projected to be at 775 million bushels versus 854 million last 
year and 1.176 billion bushels during the 2013-14 crop year. The global 
carryover was raised to 238.87 million tons versus 231.9 expected and 232.04 
seen last month. This was above the 229.7-234 MMT range of expectations. A 4 
million ton drop in Chinese domestic usage and 2-million-ton drop in India were 
the highlighted changes on the world balance sheet leading to the ending stocks 
jump. On the March Kansas City chart the previous low at $4.51 3/4 is chart 
resistance then the 10-day at $4.58. The new contract low printed Tuesday at 
$4.42 1/4 is chart support.  

   David Fiala is a DTN contributing analyst and the President of FuturesOne 
and a registered trading adviser.
David Fiala can be reached at 
Follow David Fiala on Twitter @davidfiala


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