DTN Midday Grain Comments 11/27 10:36
Corn, Wheat Lower at Midday
Trade is lower at midday in limited holiday trade.
By David Fiala
DTN Contributing Analyst
The U.S. stock markets are mixed with the Dow up 25 points. The interest
rate products are lower. The dollar index is 30 points higher. Energies are
lower with crude down $0.90. Livestock trade is mixed with cattle higher, and
hogs lower. Precious metals are lower with gold down $13.
Corn trade is 4 to 5 lower with general commodity weakness due to dollar
strength offsetting strong export sales. Trade volume is expected to remain low
on today, right now selling volume is pushing the market lower. Ethanol margins
remain under pressure with the energy weakness this morning but the slipped
corn futures obviously are moving along with it. Bigger downside still exists
for corn as we move through the crop year if ethanol margins turn poor enough
to scale back production. The weekly export sales were stronger than expected
at 2.04 million metric tons accounting for the large sale to Mexico announced
last week. The weak board and preholiday purchases were part of the reason. On
the March chart, first support was the 10-day moving average at $3.69 which we
are now below, so major support is the recently printed contract low at $3.65.
Resistance is at the 20-day moving average at $3.76.
Soybean trade is mixed at midday with trade seeing commercial support after
decent export sales. Meal is $1 to $2 lower, and oil is 5 to 15 points higher.
South American weather brings some rains late this week, and a wetter extended
forecast for some areas but some holes are likely to remain in Brazil. Soybeans
basis has been fairly quiet in recent days, with no major moves. If Argentina
drops export taxes more soybeans could move onto the world market in the near
term but there appears to be some near term political hurdles to accomplishing
this. The weekly export sales were good at 1.17 million metric tons of beans,
254,900 of meal, and 12,800 of oil. On the January chart, support is now the
20-day moving average at $8.67 with resistance at $8.81, then 50-day then
$9.21-$9.24 which is the area of the 100-day and three-month high. We noted the
key reversal and outside day with a higher close on Monday night; that upside
momentum remains in play. If we can close above the 20-day, and preferably
close higher on today, it will give us two daily closes above the 20-day which
may also bring in chart buying Sunday night.
Wheat trade is 2 to 12 cents lower across three contracts this morning with
Minneapolis contract leading the trade on spread action again, with the dollar
moving to new highs limiting the upside. Russian conditions should improve this
week heading towards dormancy, with no major cold threats in the near term.
Egypt bought French wheat with their tender earlier in the week. Weekly export
sales were soft at 303,700 metric tons. Winter storms will bring moisture so
some wheat country the next few days. On the December Kansas City chart support
is at the new contract low printed Monday at $4.49 with resistance at the $4.73
20-day moving average.
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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