DTN Midday Grain Comments 10/30 11:04
Grains Flat to Lower at Midday
Grain trade is weaker at midday with soybeans leading the path lower.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are mixed with the Dow up 120. The interest
rate products are lower. The dollar index is 16 higher. Energies are lower with
crude down $1.40. Livestock trade is mostly higher. Precious metals are lower
with gold down $28.
Corn trade is flat to 2 lower at midday after touching the $3.81 August high
on the overnight trade. Outside markets are negative with a firmer dollar and
weaker crude oil. We have made a 30% retracement of the May-October market
decline with a 40% retracement at $3.98. This range is a typical retracement
bounce range and of course it surprised many this month. Seasonally you look
for a low once you are past the 50% level of harvest, but we are only getting
there this week. Weather remains open for harvest to advance in the near term,
while South America is generally expected to see improved planting pace, but
overall acres are the bigger question. Ethanol production should remain
elevated with margins positive but seeing further pressure from the rising corn
price and sliding crude. December chart support is the 10-day moving average at
$3.60. The weekly export sales were disappointing at 489,800 metric tons, and
the USDA announced a sorghum sale of 113,000 metric tons to unknown.
Soybean trade is 8 to 13 cents lower after the big gains yesterday with long
liquidation kicking in this morning. Meal is $8 to $9 lower at midday after
hitting new highs overnight, with oil flat to 10 points lower. The nearby cash
market is firm due to the pipeline needing to be filled with new crop supplies.
Also scheduled shut downs lowered meal and oil supplies this past month or so.
Short covering has back off this morning robbing the trade of some of the
upward bias. Expect an active trade the rest of the week with 30-50 cent range
potential with a 30 range so far today. On the January soybean chart the
100-day moving average is up at $10.82, the area in between our closes today
and the 100-day are $1.35-1.60 above the contract lows printed less than a
month ago. This rally should get more beans out of farmer and reseller hands.
The weekly export sales estimates were good at 1.33 million metric tons of
beans, 147,800 of meal, and 15,800 of soyoil. This USDA announced additional
sales to China of 132,000 metric tons.
Wheat trade is mixed at midday with selling pressure spilling over from the
row crops after early strength. The dollar has firmed after the Federal Reserve
ended QE3 yesterday, but is off the overnight highs. The Kansas City December
contract is back above the 50-day and 10-day which could spark chart buying the
next two days as we end the week and month. The 100-day up at $6.48 is the next
major moving average. The weekly sales were at the high end of expectations at
444,900 metric tons. The demand picture needs to improve to support the bull
argument here. Wheat appears to have found a low in late September but the
October rally / bounce stalled over a week ago. It just seems like wheat will
take direction from the row crops near term.
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
Copyright 2014 DTN/The Progressive Farmer. All rights reserved.
Get your local Cash Bids emailed to you each morning from DTN – click here
to sign up for DTN Snapshot.