DTN Midday Grain Comments 01/29 11:22
All Grains Lower at Midday
The U.S. stock market is firmer with the Dow up 88. The dollar index is 10
points higher. Interest rate products are firmer. Energies are mixed with crude
down $0.20. Livestock trade is lower. Precious metals are narrowly mixed.
By David Fiala
DTN Contributing Analyst
Corn trade 2 cents lower; trade has seen a range of nearly 2 higher to 4
lower with March futures trading squarely in the middle of the $3.80s. After
some initial strength, the limited buying was found to give us follow-through
to the upside overnight. The market is looking at a trading range with funds
seemingly wanting to buy on breaks to balance positions with hedging interest
noted on rallies. Ethanol margins remain range bound with the energy complex
bouncing yesterday into today after the big drop off the past three weeks. The
chart has not turned but we have ethanol and unleaded around 2 cents higher at
midday. The crude and energy spiked higher on the Iran news but then slipped to
a three-month low on Monday, down approximately $13 a barrel from the high seen
during the first week of January. The dollar is firming, so outside market
resistance has kept corn from moving higher. Corn basis should continue to
react to day to day moves. On the March contract support is the lower Bollinger
Band at $3.78 1/2 and then recent lows at $3.77, then the $3.71 4-month low,
with resistance at the $3.94 recent 2 1/2 month high.
Soybean trade is 2 cents lower; meal is off $1.50 and bean oil is flat.
Beans and corn seem to have some spreading activity going on as well as minor
chart inspired positioning illustrated by the opposite moves yesterday into
this morning, but now at midday they are both slightly lower. South American
weather is status quo for the most part which has the market, at this juncture
in the growing season, feeling more comfortable with where production will be.
So the soy market has priced-in that negative news, or taken out weather
premium, this month with prices now 70 cents below the high seen at the
beginning of the month. The Brazilian ral remains very cheap as well hurting
U.S. export competitiveness. Good crush margins should be offering support. The
March soybean chart support is the $8.82 early December low, with resistance at
the $9.11 10-day moving average.
Wheat trade is around a nickel to 7 cents lower at midday turning over on
the chart with spillover weakness from corn, and the soybean weakness over the
past three weeks. Cold threats remain limited for the Plains and now that we
will be in February next week, the trade sees less chances for winter kill.
Kansas City is at an 87-cent discount to Chicago near the top of the recent
range, while Minneapolis is back to a 25-cent discount. Russian values remain
elevated with trade looking for confirmation of various milling grades to China
in the short term. The March Kansas City chart support is the lower Bollinger
Band at $4.71, and resistance is the 20-day at $4.87. We are near a three-week
low, with the March Kansas City 50-day at $4.52, then the 200-day at $4.58 the
next level of support to point to since it appears this rally has or is turning
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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