Sunday Night Grain Outlook, 6-1-08
Sunday Night Grain Outlook
By Duane Lowry
Sunday, June 1, 2008
OPENING CALL:
Corn= mixed, Wheat= mixed, Soybeans= mixed.
Weather provides no shortage of moisture and normal-above temps for the Midwest. The 1-5 day window will produce 75% coverage of ¼-1 ¼, locally 3 ½ inch rains. The 6-10 day outlook calls for normal temps in the northwest, above elsewhere. Precip will be mostly normal. The 11-15 day forecast suggests normal temps and normal-above precip. I see weather as a bearish input.
News> Saudi Arabia says they will continue to peg their currency against the US $. More negative press for the agriculture community… Barron’s: “At a time when crop prices are at historic highs with no major downturn in sight, farm-state lawmakers in Congress have rammed through a new five-year farm bill stuffed with billions of dollars in subsidies that go far beyond traditional support for row crops like corn and soybeans.” “If lawmakers can’t cut farm subsidies when farmers are making millions, consumers are paying high food prices and budget is in deficit, there’s no time that they will be able to fix them,” says Brian Riedl, a senior policy analyst at the Heritage Foundation. The CFTC has launched an investigation into potential irregularities in the cotton futures market, according to people familiar with the matter. *Commissions are considering publicly acknowledging the ongoing, confidential probe as soon as next week, along with a broader set of oversight initiatives involving other agricultural markets. The CFTC is also said to be reviewing potential technical changes, such as how physical commodities are delivered to satisfy futures contracts. Argentina’s national guard arrested eight protesting farmers who attempted to block a highway Friday.
Wheat will find mixed expectations. There will certainly be encouragement from Friday’s strength and reversal-up weekly technical action. The fundamental backdrop remains bearish, but some legitimate argument can be made that such is becoming old news. Expect to find good buying on relatively minor weakness.
Corn will also find mixed expectations. Friday’s price action will encourage the already bullishly-biased trader sentiment. So even if we open lower, expect to find good buying interest on any notable weakness. Weather will actually find mixed reviews. This author sees weather as bearish; others are troubled by slow crop progress and fears regarding the still unplanted acreage. Traders also near uniformly expect Monday afternoon’s weekly crop ratings to show dismal conditions. Weekend news stories about additional CFTC investigations and potential new changes targeted towards speculator involvement in agricultural futures and not just energy futures should also be a tempering influence to any large new infusion of money-flow to ag commodities. Yet, the predominant trader attitude after Friday will be again to expect limited weakness potential. This writer sees any early week strength as difficult to maintain through the week and a selling opportunity. We are likely to continue to be dominated by liquidation pressures throughout the entire month of June.
Soybeans will also find mixed expectations. Friday’s price action and still unrest in Argentina will be the main talking points. Traders expect very Monday afternoon’s planting progress data to be troubling and will be another key reason traders will look to buy any early weakness tonight.
In summary, there will be mixed expectations for the opening direction, but it seems many will want to view any weakness tonight as a buying opportunity as traders prepare for Monday afternoon’s crop progress report amid expectations of a bullish reaction.
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.
