DTN Midday Grain Comments 02/26 12:02
Grains Mixed at Midday
Row crops are higher at midday while wheat continues to struggle.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are mixed at midday with the Dow futures up 1
point. The interest rate products are higher. The dollar index is 87 higher.
Energies are lower with crude down $1.60. Livestock trade is mixed with cattle
leading. Precious metals are higher with gold up $9.
Corn trade is 2 to 4 cents higher at midday with trade finding good buying
since testing the $3.80 area yesterday. Ethanol margins have improved for
blenders, but producer margins remain very tight with the inability of ethanol
values to follow the unleaded gasoline rally. The winter weather should keep
feed demand up in the near term. The weekly export sales were 715,800 metric
tons, in line with the recent pace. On the chart we could see greater pressure
before the week is over if we cannot get back above the $3.89 May 100-day,
which is chart resistance. We have now closed three days in a row below the
100-day and lowest major moving average. The May 2015 low of $3.73 3/4 is now
key support. There is a near-term danger of fund long liquidation if we cannot
get back above the 100-day. Fundamentally the market should view a drop below
the 2015 low would discourage planted area and tighten the 2015-16 balance
Soybean trade is 6 to 9 cents higher at midday, with meal $1 to $2 higher,
and oil 15 to 25 points higher. Logistic issues in Brazil will continued to be
watched for disruptions with trucker strikes. Crush margins remain good which
should support domestic demand. Harvest in Brazil should continue to pick up as
we move toward March 1; currently it is over a third complete. China washing
out of sales could be a negative item, if they chose to do so as they return
from holiday. The soy complex does have great demand, but we also have record
global supply. The weekly export sales were a little disappointing at 459,200
of beans, 6,400 of meals, and 14,200 of oil. On the May soybean chart support
is at the $10.05 10-day then the $9.90 20-day with resistance was at the $10.32
high reached yesterday with some help from buy stops / short covering yesterday
with the positive chart move.
Wheat trade is flat to 5 cents lower across the three contracts with trade
continue to chop around near the lows. The dollar is continuing a strong
sideways pattern and remains near the recent highs limiting export interest
with additional strength tied to lower than expected inflation numbers. Snow
cover on parts of the southern plains will protect wheat with the pending cold
snap. The weekly export sales were 328,300 metric tons, which was in the middle
of the expected range. On the May Kansas City chart the market is below all
major moving averages. Nearby resistance is at the 10-day and 20-day moving
averages in the $5.48 to $5.51 area. New lows were reached this morning at
David Fiala is a DTN contributing analyst and the president of FuturesOne
and a registered Trading Adviser.
David Fiala can be reached at email@example.com
Follow David Fiala on Twitter @davidfiala
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