Sunday Night Grain Outlook, 4-13-08
Sunday Night Grain Outlook
By Duane Lowry
Sunday, April 13, 2008
OPENING CALL:
Corn= steady-better, Wheat= steady-better, Soybeans= steady-better.
Weather will find some mixed spins. The US models provided a wetter tone than Friday’s forecast and the trade wants to be bullish. Consequently, this will be the initial focus for most. The European models are drier, but no area will enjoy 2 weeks without rain. That said, many/most areas will find multiple days of net drying and enough drying to allow fieldwork activity to evolve. Most rain events found in during the next 2 weeks will offer much lighter precip totals in most areas than the recent moisture events.
News> The G7 meeting provided comments that will encourage support of the US Dollar.
Wheat will find little for new fundamental support to begin the new week. Friday’s weak price action and overall threatening chart look will encourage some selling interest on any notable recovery bounce. However, short-term technical indicators certainly suggest that technical corrective bounce is a viable potential scenario.
Corn will look to weather for direction and find mixed spins. The trade is heavily long and wants to be bullish; thus that will be the predominant early slant to weather. However, warming temps and limited precip totals in any of the rain events seen for the next two weeks will allow many areas to make progress with spring fieldwork activity. I don’t see the weather as a bullish influence, but undoubtedly many will. Maybe this leads to trade on both sides tonight? The overall price action implications from Thursday and Friday’s weakness will be to increase selling interest on rallies, limiting upside follow-through potential of any early week strength that may occur. Overall, the corn market is saturated with small spec long positions that most established during the last two weeks are not profitable. The weather pattern/forecast does not look troubling enough to cause a legitimate planting delay concern for the 2008 production season. Consequently, expect to find selling interest on short-term rallies and an inevitable and sizeable liquidation flush to the corn market during the next several weeks. If the crop gets planted in an acceptable fashion, the tables will quickly turn and focus on the plentiful soil moisture profiles.
Soybeans will find little for new news to discuss. Weather isn’t seen as such an immediate influence for soybeans. Short-term technical signals are mixed. Overall price action warns of liquidation activities ahead. Trade on both sides seem possible, but with increasing selling interest to surface on small rallies.
In summary, expect to find mixed spins tonight amid a backdrop of a trade bias to be bullish. Rallies will find increasing sales interest after Thursday and Friday’s price action, but the weather isn’t enough of a one-way street to inspire aggressive selling on weakness. Overall, I believe the weather pattern/forecasts will allow for a timely enough 2008 planting season and soil moisture profiles in nearly all regions will be extremely favorable. We are poised for a notable liquidation price flush, especially in the corn market, with soybeans likely to probe the recent lows during the next several weeks. Outside market activity should also provide a negative backdrop to commodities in general. Any early week price strength, if it occurs, should be seen as a selling opportunity.
This newsletter is prepared from information believed to be reliable. Early Market News, Inc. does not guarantee that such information is accurate or complete and it should not be relied upon as such. Opinions expressed are subject to change without notice.
