DTN Midday Grain Comments 05/22 11:18
All Grains Trading Higher at Midday
Wheat trade is the midday leader.
By David Fiala
DTN Contributing Analyst
The U.S. stock markets are lower with the Dow down 18. The interest rate
products are flat to lower. The dollar index is 51 lower. Energies are lower
with crude down $0.80. Livestock trade is mixed with strength in cattle.
Precious metals are mixed with gold up 14.
Corn trade is 3 to 5 higher on old crop, and flat on new crop with continued
strength in the front months. Outside markets are neutral to a little friendly
so far. July futures continue to have upside resistance at $6.82, the 100-day
moving average, the $7.11 the 200-day. Rally's have struggled to extend through
this area, and cash values are moving into areas that have triggred significant
sales in the recent past. Chart support is at the $6.46 20-day with the $6.10
April low major support. December has quickly rebounded almost 20 cents from
the $5.12 low printed early Tuesday. The 20-day is up at $5.36 which is
important resistance. The weather remains good enough that the lack of near
term weather issues can put the pressure back on in a hurry. The next two
upside targets are $5.43, the 50-day and $5.66, the 100-day. Basis in generally
holding together on corn, with continued strong ethanol margins supporting
trade. The weekly export sales were ok at 104,600 metric tons of old crop, and
341,600 metric tons of new.
Soybean trade is sharply stronger on the old crop 10 to 20 higher, and flat
on new crop. Meal is $5 to $6 higher, and oil is 10 to 20 points lower. The
old/new crop spreads remain strong for now. The exceptional export year we have
had, keeping in mind our short drought 2012 crop, it still seems like all roads
point to running out of old-crop beans in August. On the chart July is through
$15, and August made it over $14 yesterday. November made it above the $12.32
50-day with the 100-day up at $12.68 the next upside target if we can find a
reason to keep the rally going. In the big big picture November beans slipped
from $14.10 to $11.85, a 40% upside bounce-retracement would be to the $12.75
area. So a fairly normal short covering recovery makes the 100-day a good
target. The weekly export sales estimates were good at 183,500 metric tons of
old, and 838,900 of new crop, 131,200 metric tons of old crop meal, 125,000
metric tons of new crop meal, and 9,600 metric tons of soy oil. The rally on
the board has produced significant farmer and commercial selling, helping to
trigger a swift collapse in the basis.
Wheat trade is 7 to 14 higher across the exchanges at midday, with the
weaker dollar helping a bit, in additions to fresh concerns about crop
production in the EU. The rumored export interest has yet to be confirmed this
week, but US origin should remain competitive in the near term. Weather
continues to be more of the same so far, with potential improvement in Russia
in the near term. 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
yearly low and resistance at $7.05-7.07 where we find the 20-day and 50-day
moving averages. The weekly export sales were good at 239,900 of old crop, and
713,600 of new crop.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered Trading Adviser
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