DTN Midday Grain Comments 09/18 11:17
Soybeans Leading Grains Lower at Midday
Grain trade is lower at midday with limited fresh news ahead of the expected
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are higher with the Dow up 90. The interest
rate products are mostly higher. The dollar index is 2 lower. Energies are
lower with crude down $0.80. Livestock trade is lower. Precious metals are
lower with gold down $9.00.
Corn trade is 1 to 3 cents lower in quiet trade at midday. Weather remains a
non-issue with the extended forecast turning mostly warmer. Ethanol producers
have been heavily selling/hedging future production margins. This may have
actually supported corn yesterday with hedgers buying corn along with the
selling of ethanol. Ethanol is now more than 80 cents cheaper than unleaded on
the board, which is under 70% of unleaded price. This should encourage more
ethanol usage. Corn basis has started to weaken a bit more in front of the
impending record harvest, but is still strong in some isolated locations. On
the December chart, support is at the $3.35 3/4 low with resistance at the
10-day moving average at $3.44. The weekly export sales were in the middle of
the expected range at 659,700 metric tons. Some weekly sales numbers over 1
million tons are likely needed to support the bull argument near term. Without
bigger sales data the lower prices are not finding the demand needed to suggest
the carryover estimate will stop getting larger.
Soybean trade is 8 to 12 cents lower and near the daily lows at midday. Meal
is $6 to $7 lower, and oil is 40 to 50 points lower. Soybean basis is eroding
rapidly as exporters and processors start to get fresh supplies. Notable
November soybean chart support is at the new contract low printed last Thursday
(USDA report day) at $9.69 with resistance at $9.91, where we find the 10-day
moving average. The weekly export sales were good at 1.47 million metric tons
of soybeans, 183,500 of meal, and 28,500 of oil. The quarterly stocks report is
due out in 12 days. Many expect sideways to slightly lower price action the
rest of the month until we get to that report. The significance of the
September stocks report this year is muted with the expectations of a huge
record 2014 crop.
Wheat trade is 7 to 10 cents lower at midday with renewed selling picking up
following a low weekly sales number. The dollar is nearing 4-year highs on the
expectation of interest rates beginning to move up, and European uncertainty,
which continues to reduce export competitiveness for US wheat. The Southern
Plains continue to battle ongoing drought, although improved this past month,
it can still hinder early planting and development of wheat. The potential for
heavy rain the next few days across the Southern Plains will need to be
watched. Wheat is oversold on the charts with limited chart support to mention
since we are at our lows. First resistance on the Kansas City December contract
is at $6.07, the 10-day moving average. The weekly export sales were
disappointing at 314,500 metric tons.
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
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