DTN Midday Grain Comments 10/06 11:46
Grains Higher at Midday
Grain trade is seeing gains at midday.
By David Fiala
DTN Contributing Analyst
The U.S. stock markets are mixed with the Dow futures up 20 points. The
interest rate products are higher. The dollar index is 55 points lower.
Energies are higher with crude up $2. Livestock trade is higher to sharply
higher. Precious metals are higher with gold up $10.
Corn trade is 5 cents higher and near the daily highs at midday due to fund
buying and spillover support from beans. Trans Pacific Partnership optimism has
been talked about in the news as a positive demand item, but others argue the
strength today is light short covering and new buying. Seasonally we should be
in search of a harvest low, but the market has held a firmer trend over the
past 5 weeks. December corn is flirting with the 200-day and highest major
moving average at midday at $3.99. The $4.02 2-month high is the next level of
resistance where buy stops are lightly to be sitting above in volume. The
question with a rally now is with good supplies domestically and globally of
feed grains will demand suffer if prices go higher. The Linn Group released a
number closer to the August ProFarmer number Monday which could be noted as a
supportive factor here today. Their production estimate was just under 13.3
billion using a 164.7 yield. On the nearby December chart nearby support is the
100-day moving average at $3.88, then the 20-day at $3.84. Resistance is at the
200-day and two-month high mentioned above. Short covering could occur here as
part of position squaring ahead of the WASDE report due out Friday.
Soybean trade is up 7 cents at midday, meal is up $1 and bean oil is up 25
points. Trade was lower overnight due to a bump in crop ratings which is pretty
rare for October. But as of midday the market shook off that news and we are
back in the upper part of our range since late August. The soybean harvest was
as expected at 42% complete versus the 32% average. The weather should allow
the soybean harvest to be past the half way point by the report day on Friday.
So market bulls could argue the harvest lows are in since we are past the 50%
mark of the 2015 harvest. Market bears will continue to point to burdensome
global supplies with no drop in South American Plantings this fall and winter
expected versus last year. Soybean conditions improved by 2% to 64% good to
excellent which is still down from 73% a year ago, but a seasonal item we
usually do not see. The Linn Group gave a 47.5 bushel yield with a 3.898
billion bushel production estimate yesterday which was not too far off from the
other private estimates this past week. On the November chart the contract low
at $8.53 1/4 is long term support with the 20-day moving average at $8.79
nearby support. Upside resistance is at the $8.99 50-day then the $9.02 high
seen last week.
Wheat trade is up 7 to 11 cents at midday which has it near the daily highs.
Spillover support from the row crops and position squaring leading to short
covering appears to be occurring today. Wheat has some upward momentum in place
since September. Winter wheat plantings feel behind normal coming in at 49%
versus the 51% average on the weekly report Monday afternoon. Focus on corn and
soybean harvest activity and the low wheat prices may limit winter wheat
plantings this month. We could argue here winter wheat is rallying to buy a few
more acres here. On the Kansas City December chart support is at the 10-day at
$5.01 and 20-day moving average at $4.93 with resistance at the $5.15
seven-week high reached this morning then the $5.33 100-day moving average.
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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