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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