DTN Midday Grain Comments 03/30 11:40
Corn Flat to Lower, Soy Lower, Wheat Mixed at Midday
Trade continues to drift lower.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are higher with the Dow futures up 80 points.
The interest rate products are lower. The dollar index is 15 points higher.
Energies are higher with crude up $.80. Livestock trade is mixed with cattle
sharply lower. Precious metals are mixed with gold down $4.50.
Corn trade is flat to 1 cent lower at midday, drifting along the low end of
the range ahead of the USDA report Friday. We favor friendly corn acreage
numbers on Friday, but with beans lower and if they have a bearish number, corn
could be pulled lower by beans. Trade has priced in plenty of negative
information ahead of the coming report. Ethanol margins remain stable this
morning and are likely to stay range bound. The weekly export sales were a bit
softer at 716,900 metric tons of old crop, and 125,000 of new. Friday we will
see two big USDA numbers: the March Planting Intentions and March Quarterly
Grain Stocks report. The average acre guess is 91.034 million acres with a
range of 89.7 ma to 92.5 ma. March 1 Quarterly stocks are expected to be at
8.534 billion bushels on a range of 8.205 billion to 8.9 billion bushels; this
is up from 7.822 billion a year ago. Once we are past Friday, the focus should
be on planting and early field work weather. On the May chart support is at the
$3.52 late December low. Resistance is the 10-day at $3.59, which we tested
overnight; next resistance is the 20-day at $3.64.
Soybean trade is 3 to 7 cents lower at midday with trade grinding into new
lows for the move. Meal is flat to $1 lower and oil is 30 to 40 points lower.
Chart pressure and heavy supply side fundamentals continue to weigh on beans.
Long liquidation does appear to be carrying trade lower versus expectations for
bearish USDA numbers on Friday. This pressure is pricing-in some bigger
acreage. The average trade guess for 2017 U.S. soybean acreage is at 88.128
million acres; the range of estimates is 85.9 million to 90.2 million. March 1
Quarterly stocks are expected to be at 1.684 billion bushels, with a range of
1.627 billion to 1.885 billion bushels. The weekly export sales were good
seasonally at 681,000 metric tons of old crop, 315,600 of new crop with 162,600
of meal, and 12,500 of oil. On the May soybean chart, nearby support is hard to
identify with this lower trend. The one-year low is at $9.37 1/4, which is key
chart support at this juncture with fresh lows for the move made this morning
at $9.61. Resistance is at the 10-day and lowest major moving average at $9.84.
Wheat trade is mixed overnight with Minneapolis being the leader again
overnight. A little more follow-up rain is expected in the near term with good
coverage for most of the hard red wheat belt out of the prior systems. Warmer
weather should continue to push growth; the eight- to 14-day forecast looks
warmer and drier for much of the belt. Cold threats appear limited, and then
once we are in the second week of April, we are moving out of frost or freeze
risk. The weekly export sales were OK at 464,100 metric tons of old crop, and
163,500 of new crop. The quarterly report stocks are expected to be 1.627
billion bushels, with a range of 1.450 billion to 1.721 billion. Spring wheat
acreage is expected to be at 11.27 million acres with a range of 9.9 million to
12.2 million versus the 11.605 million 2016 acreage. On the May KC contract,
support is at the daily low at $4.18 3/4, then the $4.11 1/2, contract low.
Resistance is at the 10-day at $4.31. Wheat is now over 50 cents below our
nine-month high printed in mid-February and not far from the contract lows;
this echoes the large historic supply side fundamentals we have for wheat. The
stocks report on Friday will be a reminder of that.
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 Fiala on Twitter @davidfiala
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