Monday Night Grain Outlook, 5-26-08
Monday Night Grain Outlook
By Duane Lowry
Sunday, May 25, 2008
OPENING CALL:
Corn= steady-better, Wheat= steady-better, Soybeans= steady-better.
Weather provided better than expected precip for the US hrw wheat. Most areas appear to be in good shape, but approximately 15% of the belt remains too dry. Midwest weather expectations are generally favorable.
News> The Argentine government scrapped plans to meet with ag leaders on Monday evening. Yet, local media reported the government was considering plans to adjust the controversial export tax.
Wheat will lean better on hopes Friday’s reversal-up action and firmer crude oil values will trigger some bottom-picking interest. Weather factors would seem to vote for a lower opening. Overall optimism/comfort towards world wheat production can be seen in world wheat buyers’ attitudes, which seem to focus on patience. The wheat market continues to function amid a bearish fundamental backdrop. Just because long-held downside objectives have been achieved doesn’t mean the market must transform into a bull market. We can see further price erosion and/or stabilizing price unfold for several more weeks before a more confident/clear bottom may present itself.
Corn will lean better on “just because” default trader biases, along with firmer crude oil values. Weather should be seen as a bearish factor. In years past, we would be lower and find sellers lined up to place orders. But, we are not in years past. We are however still involved in an overall liquidation atmosphere. Early strength may find difficulty in building any sustainable follow-through buying interest. Given the current two-week weather forecast window, we could easily find difficulty in generating a Midwest weather scare until July. This market remains extremely vulnerable to a notable liquidation decline. Any faltering in the energy markets could quickly inspire new selling in the corn market. Traders will continue to keep a watchful eye on crude oil trends.
Soybeans will start higher on “tone” from Argentina developments between the government and farm leaders. Yet, there doesn’t seem to be a clear definitive expected outcome. Firm crude will also fuel early strength. Other news seems rather limited. Overall price action during the past several weeks has been extremely choppy and certainly has not always offered a clear unified stance with either crude oil or Argentine developments. It will not surprise me to see early week strength fail by the end of the week, but many technical indicators offer some “crossroads” appearance.
In summary, firmer crude oil values triggered by problems in Nigeria seem to be the initial trendsetter for tonight’s grain trade. Weather should receive a bearish slant. Price action spin can be found to match anyone’s desires. Expectations for end-of-the-month antics are mixed, with some expecting liquidation activity and others expecting “dress it up” strength. Argentine developments will get a supportive spin, largely due to continued uncertainty and some appearance that escalation is possible. Yet, local media seems to offer more hope of government concessions and ag leaders seem slow to escalate the rhetoric, which makes me think an opportunity exists for a compromise that will allow the government to save face and not appear to be capitulating to protestors. Right or wrong, that is about the only way this will be allowed to conclude, which maybe the ag leaders understand and why they don’t seem that anxious to stage another aggressive strike.
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.
