DTN Midday Grain Comments 05/25 12:47
All Grains Higher at Midday
Wheat leads at midday with soybeans and corn firmer heading towards the long
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are mixed with the Dow down 10 points. The
interest rate products are weaker. The dollar index is 45 points higher.
Energies are weaker with crude down 2.70. Livestock trade is mostly higher.
Precious metals are weaker with gold down 1.00.
Corn trade is 1 to 2 cents higher at midday with trade following the lead of
the firmer soy and wheat trade this morning, but we remain below the fresh
highs scored yesterday with little fresh buying enthusiasm so far. Warm weather
should dominate the week, with rain coverage looking better for the west, and
better for the second week out with some model disagreement. The second crop
areas of Brazil are trending back drier in the near term with some storm
damage. Ethanol blender margins are narrowing with the energy complex pulling
back well of the recent highs, while corn remains elevated along with ethanol
futures holding over $1.52. On the July chart we moved back above the 20-day at
$4.02 with the next level of support is 50-day at 3.95 which we tested to start
the week, with resistance at the fresh high at $4.12 1/4.
Soybean trade is 3 to 6 cents higher at midday with trade trying to regain
the momentum lost yesterday. Meal is $2 to $3 higher and oil is 25 to 35 points
lower. Trucker strikes are disrupting logistics in South America as harvest
winds down, and China was booking late summer soy cargos off the West Coast
with sales of 312,000 metric tons of new crop sold today, along with 165,000 of
option origin. Crush margins have narrowed but remain positive, with meal
starting to find buyers again with trade $10 off the lows but struggling to
hold gains. Basis has remained steady, with trade likely to remain quiet into
the weekend. On the July chart, trade is just above the 50-day at $10.38, with
the upper Bollinger Band at 10.64 the next level of resistance.
Wheat trade is 6 to 11 cents higher at midday with trade trying to shake off
the turn lower yesterday, with profit taking likely going into the long weekend
late in the session. Warmer weather should help to boost maturity with the crop
still behind normal, but catching up with another week of heat likely to add
stress to the heading crop with areas south of I-70 starting to change. Some
better rain potential was showing for Kansas in the overnight forecast but it
is getting late to matter, especially for the second week. Spring wheat should
see better progress with warmer weather helping to catch up emergence, with
Canada remaining on the dry side. The Black Sea area will continue to dominate
export trade with growing concerns about drier winter wheat, and slow spring
wheat seeding. Black Sea values are at $206 a ton. India is raising import
tariffs as well. On the July Kansas City contract support is the 20-day at
5.37, with the upper Bollinger Band at 5.65.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered adviser.
He can be reached at firstname.lastname@example.org
Follow him on Twitter @davidfiala
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