DTN Midday Grain Comments 05/21 11:15
All Grains Higher at Midday
Corn trade again leads broadly firmer action.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are firmer with the Dow 135 points higher. The
interest rate products are firmer. The dollar index is 10 higher. Energies are
mixed. Livestock trade is weaker after early mixed trade. Precious metals are
lower with gold down 3.50.
Corn trade is 5 to 7 cents higher at midday with trade leaving another gap
higher on the weekly crop progress report with July stopping short of $4.00
before fading a little. Wet weather is expected to remain in place for much of
the western and central Corn Belt keeping the slow pace slow. Ethanol margins
are narrowing fast with ethanol futures unable to keep pace with the corn rally
even as it moves to $1.40 a gallon, and better summer usage. Basis has seen
selling pressure from farmer movement. On the weekly crop progress report, we
are 49% planted vs. 80% on average, and at the low end of expectations and
historically with 19% emerged vs. 49% on average. On the July nearby chart
support is the 200-day at $3.86 3/4 that we moved through overnight with the
next level of resistance the day high at $3.99, then $4.00.
Soybean trade is 4 to 7 cents higher with trade following corn higher with
the weather concerns starting to build with the planting pace and acre
switching for soybeans but selling sticking around on strength. Meal is flat to
1.00 higher and oil is flat to 10 points higher. Crush margins remain solidly
positive overall with meal still looking to reconsolidate above $300, which we
are just below. South American currencies remain cheap at the end of harvest,
with the export wire quiet this week. Field work should generally remain slow
in the near term but more progress is likely into next week with little
incentive for farmers to push right now along with acres possibly shifting to
corn or milo with the corn soybeans ratio the narrowest in 8 years. Trade talks
are expected to continue, but little progress is expected in the near term
along with further talk about trade aid with aid of $2.00 a bushel rumored.
Weekly crop progress remains well behind normal at 19% vs. 47% on average, and
5% emerged vs. 17% on average. The July chart support is the $7.96 lower
Bollinger Band with the $7.91 low below that, and the resistance the 10-day at
$8.24, which we closed above, with the next round the 20-day at $8.38, which we
are tested but failed to hold.
Wheat trade is 3 to 8 cents higher with Kansas City trade leading with wet
weather raising more quality concerns with spread action remaining stable.
Europe and the Black Sea area will be watched with dryness in the Volga Valley,
and wet weather in the U.S. potentially limiting planting and causing disease
issues in the winter wheat. The dollar remains rangebound. Hard red wheat is
working into feed rations in some areas with the bounce in corn values with the
wheat rally looking to change that. The weekly crop progress report showed
winter wheat at 66% good to excellent, and 8% poor to very poor, up 2
percentage points, with 54% headed vs. 66% on average. Spring wheat was 70%
planted vs. 80% on average, with emergence at 26% vs. 51% on average. On the
July Kansas City chart, support is the 50-day we moved through overnight at
$4.27 with the 100-day at $4.64 the next round up.u
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered adviser
He can be reached at email@example.com
Follow him on Twitter @davidfiala
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