Sunday Night Grain Outlook, 7-20-08
Sunday Night Grain Outlook
By Duane Lowry
Sunday, July 20, 2008
OPENING CALL:
Corn= steady-easier, Wheat= steady-easier, Soybeans= steady-easier.
Weather doesn’t offer anything clearly alarming. However, some will point to weekend rains in parts of the northwestern Midwest as being bearish. Others will talk about limited precip in some parts of the Midwest during the next two weeks and generally above normal temps. The areas under most concern will be the southern Midwest and Delta. From a market perspective, it would seem that we have already discounted favorable conditions/forecasts, finding new bearish enthusiasm this week based on weather may be difficult.
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Wheat will lean slightly lower on the poor tone set from Friday’s weak floor-wide performance. Short-term technical signals are somewhat mixed, but seem to suggest any early week weakness will lack the ability to build downside momentum. Expect corrective strength during the next two weeks.
Corn will lean lower on spillover discouragement from Friday’s week ending to a disastrous week for the bulls. New news is limited. Weather doesn’t offer a clear threat, but it seems likely that the bearish weather aspects have been discounted at this time. Some long liquidation necessities may still be around, but it should be minimal. Technical/chart signals are bearish, but quite oversold. Trade sentiment has shifted from completely bullish to some level of bearishness, albeit largely in disbelief. Production ideas are on the rise. Crude oil expectations are beginning to weaken, which weighs on corn price sentiment. While I still remain longer-term bearish, with downside potential near $5 or lower, short-term technical conditions are ripe for a notable corrective rally event, possibly lasting for a couple weeks. Weather and crop conditions are generally favorable, but it won’t surprise me to see trader sentiment become troubled with the lack of precip expectations for the next 2 weeks, especially with a warmer temperature bias. Any early week weakness, if it occurs, should be limited and lack ability to build downside momentum. Current levels appear to offer some buying opportunities.
Soybeans will lean lower on spillover sentiment from Friday. New news is limited. Charts look horrible and vulnerable. However, we still have the season’s most important growing window ahead of us and today’s weather forecast may still provide some “uncertain” fodder to limit selling desires and keep bulls’ hopes alive. I expect stabilizing/firming price trends during the next two weeks.
In summary, downside potential this week should be limited. Technical conditions are poised for a rally phase, probably supportive tone for approximately 2 weeks. Any early week weakness potential should be limited and seen as a short-term buying opportunity. Crude oil futures are also likely to have only limited short-term downside potential, with a several dollar corrective rally event possible during the next couple weeks.
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.
