DTN Midday Grain Comments 07/16

Corn, Beans and Wheat All Lower at Midday

  Sharply lower to limit-down trade was seen at midday on the grain floor. The
forecasts made a fairly dramatic turn versus Friday, giving us the big losses
we are seeing this week.

By David Fiala
DTN Contributing Analyst

MARKET SUMMARY:

  The U.S. stock market indices are higher. The interest rate products are
higher. The dollar index is 4 lower. Live cattle are mixed and lean hogs are
lower. Energies are mixed and precious metals are lightly lower.

CORN:

  Corn trade is locked the 20-cent limit down and has been most of Monday
morning. A combination of bearish weather forecasts and many long positions
giving "get me out" orders have the market limit down. The synthetic price
through the options is trading around another nickel below limit down. The
night session finished in the 15 to 18 lower range, but more positive forecasts
Monday morning versus last night had many opening only around a dime to 12
lower. But the rush to get out of long positions has been too much for any
market bulls to overcome. On the charts corn futures came within pennies of the
200-day and 20-day moving averages on Friday which are important long-term and
intermediate term chart levels, respectively. The market stayed below those
levels and is now under pressure which supports thoughts that the rally last
week was only a bounce in a bear market. A close at limit down will have the
market back below all major moving averages. The outside market items are
supportive with crude lightly higher and now trading over $74 and the dollar
trade down to a new low which is getting near multi-decade lows. Weekly export
inspections were in the upper half of expectations coming in at 38.5 million
bushels.

SOYBEANS:

  Soybean trade is near limit down at midday with beans down 49 cents, meal
down $18 and soybean oil down 85 points. The weather forecasts took some heat
out and added rain, giving a much more favorable weather outlook versus Friday.
The big advance last week adding weather premium into the market set the stage
for this big fall. The NOPA June crush was reported at 141.58 million bushels
which was down nearly 2 million from May, but the number was lightly higher
than expected. This has done little to support the beans. Also a story
circulating about possible soybean rust found in Texas has done little to
support the market. The weekly export inspections came in at 13.8 which were
above expectations. So there are a few positive items Monday morning, but it
goes to show the weather is the main market mover. On the charts the 10-day
moving average on November is at $9.10 and then the 20-day is at $8.83. If we
cannot close back above the 10-day, the trade will be focused on the 20-day as
support Monday night. A confirmation of wet forecasts on the noon weather
report is likely to lock the beans at the 50-cent limit down.

WHEAT:

  Wheat trade is sharply lower due to spillover pressure from the row crops
and less threatening weather for spring wheat. At midday we have the September
contracts 18 to 20 lower. The wheat is not down as much as the row crops,
illustrating some global quality wheat uncertainty remains, but long
liquidation has begun to set in at midday. Eye the 20-day moving averages and
expect some profit-taking pressure into the close and on Tuesday if we close
below them. The 20-days on the September contracts are at $6.10 in Minneapolis,
$5.95 in KC and $6.08 in Chicago. The weekly export inspections came in at 13.8
million bushels which below expectations and added to our pressure Monday
morning.

  David Fiala

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