DTN Midday Grain Comments 01/04 11:55
All Grains Lower at Midday
The soy complex leads everything lower with longs heading for the sidelines.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are again higher at midday, but the Dow
futures are only up 25. The interest rate products are higher. The dollar index
is 17 higher. Energies are lower with crude down $0.50. Livestock trade is
mixed. Precious metals are lower with gold down $28.
Corn trade is 4 to 6 lower with pressure from weak demand and the softening
soy complex. Trade came within a quarter cent of the $6.83 1/2 gap, and has
held that area so far. The $6.78 level would be the next level of support under
that. The South American weather remains mostly good for corn for the near
term. The weekly export sales were poor coming in at 49,000 metric tons.
Ethanol production slipped on the week, and inventories declined as well. Basis
has firmed a little this week, indicating end users are having a harder time
sourcing corn, and the spread action has generally been positive as well. The
USDA numbers next Friday should include some of the tightest December 1
quarterly stocks on recent record. One private forcaster was out with a
10.80-billion-bushel production number, which is a shade higher than the
previous USDA number.
Soybean trade is 22 to 28 lower at midday. Meal is $8 to $10 lower, and oil
is 45 to 55 lower. Trade tried to move higher overnight, but the big picture
momentum still has too much selling pressure technically, and fundamentally the
market bears are noting slowing demand, increased production expectations, and
good aggregate South American weather. The March contract touched the November
lows before bouncing. Some meal and oil deliveries have surfaced keeping some
pressure on the product side of the market. The South American weather remains
mostly good in the near term, but the potential remains for some localized
issues. The weekly export sales were a little soft at 435,000 metric tons,
53,800 metric tons of meal, and 31,300 of oil.
Wheat trade is 5 to 10 lower across the three exchanges at midday with chart
selling pressure and lack of demand news weighing. Support was still at $7.50
on the March Chicago contract, but at midday we have breached that area, and
further selling could develop. The U.S. weather forecast looks marginally
improved for wheat in the near term, but conditions slipped substantially over
most of the wheat belt in December. U.S. offers are very competitive, but need
more business to confirm it/turn the market. Wheat export sales were 400,400
metric tons, working just a little below expectations.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered Trading Adviser
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