DTN Midday Grain Comments 07/17

Corn, Beans and Wheat All Lower at Midday

  Corn and beans are lower at midday due to continued favorable weather
outlooks along with bearish technical momentum. Wheat is firmer due to some
fresh export news and the limited spillover pressure from the row crops versus
Monday.

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 five higher. Live cattle are higher and lean hogs
are sharply higher. Energies are mixed and precious metals are lightly higher.


CORN:

  Corn trade is sitting around eight lower at midday, which has it near the
daily lows. The futures are within a nickel of the multi-month lows printed in
early July. The Monday afternoon crop ratings were supportive, but the weather
kept the market from moving higher overnight. Opening calls were 3 to 4 lower;
the night session finished around 2 lower, but there may be some follow-through
selling that has the market a little lower. Crop ratings were expected to
decline, but not the 6 percent loss in good-to-excellent ratings seen on the
report Monday afternoon. Good-to-excellent ratings are now at 64 percent, which
is 2 percent higher than a year ago. The crop progress number listed 56 percent
of corn silking versus 46 percent last year and a 36 percent five-year average.
The forecasts continue to have good rains for this week and some rains have
shifted into eastern Nebraska and western Iowa. Rains are falling in the
central 30 percent of Illinois currently with scattered rain in Indiana and
Ohio. Look for support this afternoon at the multi-month low of $3.36 on the
December contract; if we slip below there, further long liquidation is likely.


SOYBEANS:

  Soybean trade has been actively mixed but is challenging the downside at
midday. The beans are down a dime, meal is down $3 and soybean oil is lightly
higher. The soybean oil has been firmer due to crude strength Tuesday with
crude hitting $75, but now crude is lower on the day taking the supportive
crutch away from bean oil. This has the beans under pressure, and they have
been down 15 cents. The weather items are considered negative and have the
market lower even though the crop ratings were lightly supportive. The key
questions at this point are what a fair price is and how much supportive
information did our recent rally price into the trade with our $2 rally from
April to our high on Friday. The weekly crop ratings saw a 3 percent drop in
good-to-excellent ratings versus last week, down to 62 percent which is 5
percent better than last year. The progress number listed 60 percent of the
beans now blooming versus a 48 percent five-year average, and 14 percent are
setting pods versus an 11 percent 5-year average. So we are now at a point
where the moisture needs for beans will begin to pick up, and it looks like
much of the Belt will see needed moisture this week. If midday forecasts remain
wet the market will likely challenge the downside yet Tuesday, but remember we
are in a weather market so anything can change day to day. 

WHEAT:

  Wheat trade is firmer at midday but losing ground due to spillover pressure
from the row crops. Chicago is up 8 cents at midday; KC and Minneapolis are up
2. Futures are 8 to 10 cents off the daily highs. Early strength was seen due
to the U.S. capturing some of the Egyptian tender. There was also some buying
in wheat due to thoughts the sell-off on Monday was overdone and only due to
the spillover pressure from corn and beans. The spring wheat progress on Monday
came in at 93 percent headed which is 7 percent ahead of the average. The
winter wheat harvest was listed at 70 percent complete, 3 percent behind the
average. Spring wheat conditions declined 2 percent down to 66 percent good to
excellent versus 34 percent a year ago, which helped give us overnight strength
and support around the open. Look for spillover direction from the row crops,
if wheat moves lower on the day some long liquidation may set in. .

  David Fiala

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