DTN Midday Grain Comments 05/22 11:18
Wheat, Corn Higher at Midday
Grain is pushing higher on supportive demand ideas.
By David Fiala
DTN Contributing Analyst
The U.S. stock markets are higher with the Dow up 90. The interest rate
products are higher. The dollar index is 32 higher. Energies are lower with
crude down $1.00. Livestock trade is mixed with strength in hogs. Precious
metals are mixed with gold flat.
Corn trade is 12 to 15 higher on old crop, and 6 to 9 higher on new. Outside
markets are mixed this morning, with a strong stock market, a firmer dollar and
lower crude oil. Corn is simply recoverying the losses seen on Tuesday. Weather
looks to be more of the same in the near term, which will slow the remainding
planting progress a bit, but overall weather is not a real friendly factor at
this point. Ethanol production data was strong with a 2.1% increase over last
week's levels, that were a multi-month high. Blender and producer margins
remain good in the near term. The July chart has support at $6.33, and the
December at $5.12. The USDA announced nine cargos of new crop corn sold, six to
China, three to unknown. The bears may argue this is only scale down demand,
but bulls argue corn has good value down in the area of our yearly lows.
Soybean trade is narrowly mixed on old crop at midday while new crop is 4 to
7 higher. Meal is $2 to 3 lower, and oil is flat to 15 points lower. The old
crop rally has been running out of steam the past two days. Western processor
basis collapsed on much better farmer movement due to the rally. Market bulls
though argue the tight old crop situation is not disappearing and we still do
not even have the crop in the ground yet so we have a long way to go before new
crop bushels are available. On the Chart November is staying in between the
50-day at $12.32 and the 20-day down at $12.12. Chinese soy prices remain
strong, but their crush margins are soft in the near term. Argentina is looking
for approval to export Biodiesel to the U.S.
Wheat trade is 3 to 10 higher across the three exchanges this morning, with
winter wheat showing more strength. This is a little bit of a correction versus
Tuesday's action. Speculation about import purchases by Egypt and China
continue to surface and a good close today could find more buying interest
going into the end of the week. Rains have helped the Center and Eastern parts
of the hard wheat belt, but the battered west has had little opportunity for
improvement. Soft wheat is thought to be trading back into feed rations again
with the strong corn basis. July Chicago wheat has support at $6.65 and
resistance at $7.00. Russian weather forecasts continue to show improvement,
and are limiting damage for now.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered Trading Adviser
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