DTN Midday Grain Comments 03/07 11:38
Wheat Leading Grains at Midday
Mixed midday grain action after good strength was seen overnight.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are mixed with the Dow futures up 20. The
interest rate products are lower. The dollar index is 8 higher. Energies are
higher with crude up $1. Livestock trade is higher. Precious metals are lower
with gold down $13.
Corn trade is 2 to 5 lower at midday; trade is at the daily low and nearly
15 cents below our early highs. May traded up to the $5.02 level overnight,
which was noted as a 50% retracement of the June to January swing lower. For
the moment it appears we printed a high, but we need to close poorly to
complete a reversal-type day. The USDA will release the March World
Agricultural Supply and Demand Estimates Monday morning. The trade is expecting
a 1.488-billion-bushel carryover versus the 1.481 number last month. The range
of estimates is 1.431 to 1.656. The world carryover is expected to be down by 1
million tons to 156.3 million metric tons due to slight decreases in South
American production. Expect active trade this afternoon, for the moment
momentum is down.
Soybean trade is mixed at midday with new-crop beans down a dime and May up
a nickel. Meal is mixed as well and bean oil is down 30-60 points. The market
moved to new highs for the move up to $14.59 on the May contract, but we are
back below the previous $14.45 high at midday. Beans have seen good demand news
but market bears argue the ramp up in prices the past month have priced-in
friendly items. South American supplies are now available, which is a game
changer, but the domestic market is expected to remain tight the rest of the
crop year due to very high usage to date. Looking toward Monday, the average
trade guess for the carryover to come in at 141 million bushels versus 150
million bushels on the last report. The world carryover is expected to be down
1.5 million metric tons versus the 73-million-metric-ton February number.
Brazilian production is expected to be down around 2 million and Argentina down
around a half million tons.
Wheat trade is 4 to 10 higher across the three contracts at midday. Support
continues to come from the weak dollar this week, chart buying, short covering
and concern over Crimea seceding from Ukraine. Weekly export sales were okay
yesterday and the market liked the fact sales were better than the previous
week with prices higher. Weather looks like more of the same in the near term,
with moisture limited in the west, but with more seasonal temperatures. The
March Supply and Demand report has the trade looking for a steady world
carryover with the 183.7-million-ton February number. The domestic carryover is
expected to be at 570 million bushels versus 558 mb last month, the range of
estimates is 549-615 million bushels. On the chart, the May Chicago 10-day at
$6.20 is support, resistance is at the 200-day at $6.65.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered Trading Advisor
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