DTN Midday Grain Comments 07/12/07

   Corn, Beans and Wheat All Higher at Midday

  The monthly USDA Supply and Demand report was bearish for corn, but weather
and good export sales have corn higher at midday. Bean numbers were neutral,
but weather and chart buying have the beans up in double digits at midday.
Wheat numbers were supportive, giving us new July highs.

By David Fiala
DTN Contributing Analyst

MARKET SUMMARY:

  The U.S. stock market indices are higher. The interest rate products are
lower. The dollar index is flat. Live cattle are higher and lean hogs are
sharply higher due to technical buying and some export rumors. Energies are
lightly lower and precious metals are higher.

CORN:

  Corn trade is up 2 to 3 cents at midday due to spillover support from wheat
and beans along with positive weather arguments. The weekly export sales also
helped out the bull argument. The weekly corn sales were listed at 1 million
tons of old crop and 493,000 tons of new versus trade expectations between
700,000 and 900,000 tons. On the monthly report the new-crop 07/08 carryover
came in at 1.502 billion bushels, about 100,000 higher than expected. The
old-crop carryover jumped to 1.137 billion which was the real surprise that
added to the new crop number. The yield used for the new crop balance sheet was
unchanged from the June report at 150.3. The world balance sheet was also
negative with carryover jumping over 16 million tons, but the majority of this
was due to U.S. numbers with U.S. production up 10 million tons and beginning
stocks up nearly 4 million tons. Chinese beginning stocks were increased by 2
million tons. Look for the noon forecasts to set the tone Thursday afternoon.
Do not forget we have the July contracts going off the board at noon Friday and
either Thursday or Friday is rumored to be the last official day with the
Chicago Board of Trade as the Chicago Board of Trade of old with the CME merger
becoming effective following the announcement Monday.

SOYBEANS:

  Soybean trade is a dime higher at midday due to supportive weather items and
continued chart buying. We have seen new contract highs each day this week.
Meal we have $3 higher and bean oil 13 higher at midday. On the monthly report
the old-crop carryover came in at 600 million and the new crops at 245 million;
both were lightly higher than expected. The yield estimate remained at 41.5
bushels per acre. World carryover was down just over 2 million tons to 51.87
million which was mainly due to the U.S. production decrease. Weekly soybean
export sales were listed at 145,000 tons of old crop and 39,000 tons of new;
combined they were in the middle of expectations. Meal sales were listed at
41,000 tons of old crop and 32,000 tons of new, which was in the middle of
expectations. Soybean oil sales were listed at 9,300 tons; this was toward the
high side of expectations. The bull argument continues to be supported by
weather concerns; Thursday's USDA numbers should limit upside. 

WHEAT:

  Wheat trade has been active following interesting wheat class changes on the
USDA numbers and a lower overall carryover. At midday we have the September
contracts a penny lower in Chicago, 8 higher in Kansas City and 3 higher in
Minneapolis. The overall wheat balance sheet gave a carryover of 418 million
bushels which was down 25 million from last month; the average trade estimate
was looking for a lightly higher number. The production number was listed at
2.138 billion versus an average trade guess at 2.16 billion. The spring wheat
production number was at 498 million which was just above expectations, but
expected warm temperatures near term lend some support to Minneapolis. The hard
red winter (Kansas City) wheat production, at 964 million, was 7 percent below
last month and the soft red winter (Chicago), at 364 million bushels, was up 7
percent, which should give Kansas City support Thursday versus the other two
exchanges. The weekly export sales for wheat came in at 1.183 million tons, the
largest weekly sales number in my recent memory, plus it was during a holiday
week. We are at the highest price level in 11 years -- that alone is pretty
friendly. Look for active trade the rest of the day and do not be surprised to
see Kansas City stay firm versus Chicago.

  David Fiala

  David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered Commodity Trading Advisor.