Sunday Night Outlook, 11-11-07

Crude Oil just opened weaker and is trading down 67 points 10 minutes into the trade.

Right or wrong, grain traders seem unable to make any assessment at the present time without consulting the "outside" markets.

South American weather is nearly ideal.

Friday's grain trade had some culmination elements. From a fundamental standpoint, having the USDA production report behind us and knowing we won't need to contend with that again until January creates a certain amount of culmination and "factored in" assessments of fundamental conditions.

We are overdue for a notable correction. The C-O-T data released Friday afternoon is a reminder of the one-sided nature in the spec community, which can't help but resurrect the consideration of some year-end profit-taking.

Thus, conditions are right for weakness this week, possibly set for notable weakness. So with crude lower (now down over a $1 as I finish this post), we seem poised to see a lower start across the grains tonight, with a possible exception in wheat. Traders appear to have a desire to come away from the short side of wheat. There will also be some talk of frost concerns for parts of Argentina's wheat. I don't think the threat is that much of a concern, but traders have a mindset at the present time to respond with fear first and seek logic sometime later.

Financial markets continue to offer great and warranted concern toward the US and thus the global economies. Rather than this being inflationary, I see it as more of a threat to recessionary tendencies, which would not be favorable for commodity demand. I don't think we are that far away from the trade spin exploring that concept with a bit more respect.

Overall, the grain/soy trade should see weakness this week.