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DTN Midday Grain Comments 09/10 12:03
Grain Markets Mixed at Midday
USDA reports were supportive for corn, neutral wheat and negative beans
producing a mixed market.
By David Fiala
DTN Contributing Analyst
MARKET SUMMARY:
The U.S. stock market indices are mixed. The interest rate products are
lower. The dollar index is flat to lower. Energies are higher with crude up
$1.80. Cattle and hogs are mixed. Precious metals are flat to lower.
GENERAL COMMENTS
CORN
Corn trade is 3 to 4 higher at midday with surprisingly slow trade following
the USDA monthly report release this morning. The 2010 US Corn Production
estimate was at 13.160 billion bushels versus the average trade guess of 13.199
bb using a 162.5-bpa yield. The new crop carryover estimate was at 1.116 bb
versus the average trade guess of 1.125 bb. The harvested acreage was unchanged
at 81 million acres, exports increased by 50 million bushels but the feed
number was reduced by 100 mb to help offset the lower production number. The
old crop carryover was 26 mb less than expected at 1.386. The world ending
stocks were reduced to 135.5 million tons, which was down from last month due
mostly to the U.S. reductions. Chinese numbers were virtually unchanged. The
weekly sales totals were just okay at 680,200 tons. The bottom line about the
report today was that demand continues to inch higher and supply lower giving
reason to keep the bulls in control.
SOYBEANS
Soybean trade is 8 to 9 lower at midday, meal is down $4 to $5 and bean oil
is up 25 points. The weekly sales totals were very good for bean oil and the
spillover support from crude appears evident as well. The weekly export sales
were good for beans at 848,200 tons which has limited downside following the
negative USDA September Supply and Demand report. Combined meal sales were okay
at 86,800 tons and bean oil sales were at 20,000 tons of old crop and a big
118,000 tons of new. The USDA 2010 US Production number came in at 3.483
billion versus the 3.4 billion average trade guess. This was due to using a
44.7-bpa yield number versus the 43.8-bushel-per-acre average trade guess. The
new crop carryover was then down 10 mb from last month at 350 mb but this was
46 mb greater than expected. The world carryover was just over 1 million tons
lower at 63.61 million tons, which remains a historically big number. The
downside in beans should be limited if corn and wheat stay supported.
WHEAT
Wheat trade is mixed at midday with trade 6 lower to 4 higher across the
three exchanges. The global 2010-11 carryover was up to 177.8 million tons
versus 174.8 on the August report. This is still around 20 million lower that
the estimates prior to our world production short falls this summer, but
historically this is an OK/comfortable carryover. The 2007-08 world number was
only 124 million tons. This was arguably the most notable item on the report
which suggests we have stabilized the supply side items suggesting upside in
the futures is limited. The problem with this is it is very wet in Canada and
there are still problems to talk about, keeping the market scared of selling
breaks. Also the rally in corn may limit the additional winter wheat acres
expected this fall. U.S. domestic carryover was reduced to 902 million bushels
versus 952 mb last month and the average trade guess of 914 mb. So the domestic
numbers were neutral. The 2010-11 export number was increased by 50 mb to 1.25
bb, which is up from 881 million last year. The export numbers for wheat and
corn may still come up a little, but for now the USDA has good sizeable numbers
in the balance sheets. The weekly export sales of wheat were good at 953,400
tons.
David Fiala is a DTN contributing analyst and the President of FuturesOne
and a registered Commodity Trading Advisor.
(AG)
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