DTN Midday Grain Comments 12/12 11:12
All Grains Down at Midday
Pressure has set this morning with many contracts seeing double-digit
By David Fiala
DTN Contributing Analyst
The U.S. stock markets are lower with the Dow futures down 75. The interest
rate products are lower. The dollar index is 25 higher. Energies are mixed.
Livestock trade is higher. Precious metals are lower with gold down $28.
Corn trade is at the daily lows with March down a dime at midday. December
new crop 2014 is down 11, sitting about 14 cents below the one-month high
printed right around the report release on Tuesday. On the chart we are back
below all major moving averages. The 20-day at $4.30 is a key area for today
and tomorrow. A close below it both days would turn the chart picture back
soundly to the downside. March wheat in nearly 50 cents below the high printed
on the first trading day of the month. This has contributed to pessimism in
corn as well. The USDA report was supportive versus expectations on Tuesday,
but the market action is telling us the bias is toward production increases on
January that will offset the higher usage estimates. The weekly export sales
were OK, but not good enough to support the market coming in under 700,000
Soybean trade is 12 to 22 lower at midday with the most pressure on nearby
trade. Meal is off $9 and bean oil off 55 on the January contracts. Basis has
seen light pressure indicating sufficient movement to meet processors and
export needs in the near term. January futures did move up near the three-month
high, so a correction may be starting here. South American weather continues to
be viewed as neutral, although a hot stretch next week is raising some
concerns. Also limiting upside is a bias that additional soybean acres will
likely be found with the corn-planting delays in Argentina and market ratios.
January soybean chart support is at $13.17, the 20-day, then $12.96, the
50-day. The weekly export sales were good at 1.1 million bushels of old crop
keeping the export market a positive feature for beans. The concern looking
forward is status quo weather or better giving us big crops in South American
then in the U.S. in 2014 with expected large acreage.
Wheat trade is 5 to 10 lower across the three exchanges on most contracts,
but we have December Kansas City down 20 in thin trade. Wheat futures are now
getting back to oversold on the chart but the pressure may not be over. Futures
slipped below the September lows and found big sell stops. The Stats Canada
numbers last week, then the USDA numbers on Tuesday, were not a friend to any
wheat bulls. The cold snap did bring in some buying interest this past week,
but they were run over. The weekly export sales were only 372,200 tons, which
is too low. Long liquidation should still be a concern, but also lower prices
can find demand. Wheat trade the rest of the year may be slow most days, but
carries the ability to give us a larger move. We have seen a range of more than
40 cents the past few weeks.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered Trading Adviser
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