DTN Midday Grain Comments 02/09 11:49
Grains Mixed at Midday
Grain trade is mixed at midday following a neutral USDA monthly USDA report.
By David Fiala
DTN Contributing Analyst
Market Summary
The U.S. stock market indices are higher with the Dow futures up 64. The
interest rate products are slightly lower. The dollar index is 70 lower.
Energies are higher with crude up $2. Cattle are higher and hogs are mixed.
Precious metals are higher with gold up $15.
GENERAL COMMENTS
CORN
Corn trade is around 2 higher at midday. Trade has been active within a dime
range from just over a penny lower to nearly 9 higher. The outside market
influence is supportive, which has the momentum flat to higher. The USDA
2009/10 corn ending stocks were reduced to 1.719 billion bushels versus the
average trade guess of 1.748 and 1.764 last month. The world ending stocks were
reduced 2 million tons, down to 134.04 million tons. Brazilian corn production
was left at 51 million tons and Argentine production was raised 2 million tons
to 17.2. Higher usage estimates helped lower the carryover. The next major news
item will be the USDA Outlook Forum next Thursday and Friday, which is expected
to show big expected 2010 production due to higher acreage. This should limit
upside, but the market could bounce for a day or two if it can get above the
March 20-day at $3.65. The action today and yesterday suggests it may want to
go sideways.
SOYBEANS
Soybean trade is narrowly mixed at midday following early strength due to a
lower than expected USDA February carryover. Meal is down $1.50-$2, and bean
oil is up 35 points. With crude up more than $2 and the dollar sharply lower,
fresh sellers disappeared in lower territory. The USDA 2009/10 carryover was
down to 210 million bushels versus the average trade guess of 219 million and
245 million. On the January report, the range of guesses was 170-245 million.
Brazilian production was increased by 1 million tons, up to 66, but Argentine
production was left unchanged at 53 million tons, leaving the global carryover
virtually unchanged at 59.7 million tons. The market remains concerned about
more downside risk over the next month due to the expected bigger 2010 U.S.
production/plantings and the South American harvest.
WHEAT
Wheat trade is 3 to 7 lower across the three exchanges at midday in slow
trade. Spill-over support from the row crops helped around the open, but wheat
has been mostly lower as the report was negative for wheat. The new USDA
carryover came up to 981 million bushels versus 976 on the January report and
the average trade guess of 973 million. The global carryover was up slightly at
195.86 million tons. The wheat trade has built a large speculative short
position over the last month so bounces can occur, but there is limited chatter
about a bullish picture that could sustain any upside attempt or confirmation
of a low. The bull argument may be more about time, and it to get into the 2010
spring before counting another huge carryover on the 2010/11 balance sheet.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered Commodity Trading Advisor.
(SK)
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