After posting some of the worst losses for commodities in 2016, wheat contracts bounced higher Thursday with help from increased demand and a 1% drop in the U.S. dollar index. March soybeans ended down 2 3/4 cents, but protected most of Wednesday’s big gain.
Wheat and corn were firmer, soybeans lower, in slow midday action.
Corn trade is 1 to 2 cent higher with trade pushing through the $3.60 level at midday which is a new three-week high. Fund buying continues to add some support with the beginning of the year rebalancing.
The weekly ethanol report showed record production, with production up 1.46% on the week and stocks down 0.03%. Ethanol futures are up around 4 cents at midday recovering from the pressure on Wednesday. South American weather is keeping some of Brazil dry and some of Argentina too wet.
On the March chart support is in the area of the 10, 20, and 50-day moving averages at the $3.52-3.54, then the $3.45 1/2 the three-week low. Resistance is the December high at $3.64 3/4. The weekly export sales numbers will wait until tomorrow morning due to the holiday on Monday.
Soybean trade is 3 to 5 cents lower at midday with trade giving back a little bit of our big Wednesday gains in quiet action. Meal is $1 to $2 lower and oil is 5-10 points higher. The low early in the session yesterday was a new 6-week low prior to the solid rally and outside day with a higher close. Holding on to these gains into the weekend will be watched closely; if we do that should bring in chart buying.
Northern Brazil is seeing the most concerning dryness, and flooding concerns are lingering in Argentina which collectively kept fundamental sellers away when the chart was breaking early on Wednesday. The export wire has been quiet so far this week; world business should start shifting to South America.
On the March chart support is the 10-day at $10.10, then the 200-day at $10.06. Resistance is at the $10.22 50-day then the $10.27 20-day.
Wheat trade is 3 to 7 cents higher at midday with follow-though buying giving us new highs for the move. The weaker dollar should help trade sustain momentum into the weekend. Weather for the winter wheat areas looks fairly non-eventful but some dryness has started to build concern plus the cold spell this week could cause some damage with some snow cover falling overnight.
The southern hemisphere harvest should continue to move along creating additional available world supplies around to compete with the U.S, but it should be on the home stretch.
On the Kansas City March futures moved above the $4.21 50-day which brought in chart buying, and short covering yesterday as it becomes support. The 100-day is now nearby resistance at $4.32 which we are testing at midday, with the 50-day becoming support followed by the 20-day at $4.13.