DTN Midday Grain Comments 03/04 11:56
Soybeans Leading Grains Lower at Midday
Grain trade is lower at midday lead by beans.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are lower at midday with the DOW futures down
110 points. The interest rate products are higher. The dollar index is 60
higher. Energies are lower with crude off $0.70. Livestock trade is higher.
Precious metals are lower with gold down $3.
Corn trade is 3 to 4 cents lower at midday and near the daily low. There was
limited upside follow-through last night so recent longs have been taking
profits. Outside markets are also slightly negative. The weekly EIA report
listed production down 1.7% and stocks down 0.3%. Gasoline demand was 3.1%
lower. The lower stocks have ethanol futures up a penny while corn is down, so
this is, although small, a good day for producer margins. The lower soybean
market is giving corn spillover pressure, which may carry into the afternoon.
The May futures late January low of $3.73 3/4 is key long term support with
resistance at the $3.99-$4.03 area where we find the 50-day and 200-day moving
averages. The 10-day, 20-day, and 100-day moving averages are all clustered
around $3.90-92 which the market has chopped on both sides recently. Today we
could not get above $3.92 and are back below this area.
Soybean trade is 14 to 16 lower at midday due to concern the upcoming bulk
of the South American harvest will pressure trade. China may be out of the U.S.
market. Meal is $5 to $6 lower and bean oil is down 70 points. The bean oil
strength was supportive for beans this past week, but it is now challenging
support. View the 3,209-3,225 on the May bean oil as important chart support;
this is where we find the 50-day, 10-day and 20-day moving averages. The 20-day
at 3,209 is the lowest major moving average. The trucker strike in Brazil
looks to be waning, which should limit buying interest from the U.S. on delay
potential, Argentine strikes are in the news as well. Strikes will not lower
the record supplies so have been seen as a temporary supportive item.
Additional rain appears to be on the rain for areas of Argentina; some are too
wet. On the May soybean chart, we are below the $10.00 20-day moving average,
which is now key resistance; a move back above here this afternoon may keep
sellers away. If we close below $10 today, it opens up the potential for more
pressure before the week is over.
Wheat trade is 7 to 9 cents lower at midday due to limited follow-through
last night and spillover pressure from the beans. Downside momentum seems to
have subsided at midday. The firm dollar did appear to scare away buyers. The
wheat trade remains oversold so market bulls argue we should see another round
of short covering on even the slightest news. On the May Kansas City chart the
market is below all major moving averages with the $5.35 10-day nearby
resistance. Support is at the $5.21 3/4 low printed last week.
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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