DTN Midday Grain Comments 12/11 10:58
All Grains Lower at Midday
Broadly weaker trade at midday with corn leading us lower.
By David Fiala
DTN Contributing Analyst
The U.S. stock market is mixed with the Dow down 30. The dollar index is
unchanged. Interest rate products are weaker. Energies are weaker with crude
down $0.70. Livestock trade is mixed with cattle leading. Precious metals are
firmer with gold up $9.00.
Corn trade is 5 to 6 cents lower with trade scoring new lows for the move
with selling picking up during the day session on seasonal selling and demand
concerns. On the WASDE report, domestic carryout was unchanged at 1.91 billion,
with South American production unchanged, and world stocks at 300.6 million
metric tons up from 296 last month, but well below last year at 320.6 million.
The weekly ethanol report showed production up again, 12,000 barrels per day,
while stocks jumped sharply up, 1.176 million barrels. Basis has held up well
with some strength showing up at processors again. On the March contract
support is the lower Bollinger Band at $3.73 which we are just below at midday,
with resistance the 20-day at $3.79.
Soybeans trade is 5 to 7 cents lower with trade strength evaporating as corn
turned lower, and buy the rumor sell the fact action with 585,000 metric tons
of sales to China confirmed. Meal is $2.00 to $3.00 lower and oil is 10 to 20
points lower. The real remains cheap vs. the dollar with Brazilian weather
still in good shape, with Argentina more mixed short term. Bean basis has moved
to a more sideways trend short term with the futures rally likely to soften
basis in some areas this week. On the WASDE report, domestic carryout was
unchanged at 475 million metric tons, Brazil and Argentina production
unchanged, and world stocks at 96.4 million metric tons, up 1.0 million metric
tons last month. January chart support is the lower Bollinger band at $8.65
which we are finally pulling away from, with trade just above the 20-day at
$8.95, with the upper Bollinger Band at 9.25.
Wheat trade is 1 to 7 cents lower with trade pulling back from the gains
seen post report as the carryout declined slightly with Kansas City trade
holding up the best. The Chicago/Kansas City March spread is back to 88 cents
narrowing from the high with Kansas City gaining sharply the last two days.
Chicago also holding a 11 cent premium to Minneapolis which has narrowed to
start the week. The dollar remains rangebound. Export business remains quiet
with Russian values rising again and some midweek tenders. The forecast has
some moisture for Kansas. The WASDE report showed the carryout down 40 million
bushels to 974 million with world stocks at 289.5 million metric tons, up 1.2
million from last month. The March Kansas City chart support is the lower
Bollinger Band at $4.22, and resistance the 20-day at 4.34.
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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