Sunday Night Grain Outlook, 8-24-08
Sunday Night Grain Outlook
By Duane Lowry
Sunday, August 24, 2008
OPENING CALL:
Corn= 5-7 higher, Wheat= 2-4 higher, Soybeans= 10-15 higher.
Weather will focus on an overall lack of precip for the Midwest. The 1-5 day window appears drier than Friday’s forecast. The 6-10 window is largely dry, but the 11-15 day forecast offers a bit more optimistic view towards precip. Weather will receive a bullish spin.
News> Researchers from Japan say they have developed a cost effective method of lowering the cost of producing bioethanol from rice straw and other waste materials by more than 30%, saying it will be nearly as cost-effective as producing ethanol from corn and other foods.
Wheat will find little follow-through selling interest from Friday’s sharp decline that generated settlements down 70 cents from Thursday’s high. Expected weather-inspired strength in corn and soybeans will produce “me-too” strength for wheat. Notable resistance is not found until prices get back above Thursday’s close, offering more than 30-cents of room for a corrective bounce during the next few days.
Corn will start higher on dry weather concerns. Last week’s highs are 20 cents above Friday’s close and it certainly seems possible/probable that we can experience some probing above that level during the next few days. Traders expect crop conditions to decline Monday afternoon and are troubled by the potential for a “too dry” finish to the 2008 growing season in as much as 50% of the Midwest.
Soybeans will start higher on weather concerns. If weather forecasts remain concerning for a couple days and weekly crop ratings deteriorate Monday afternoon, we could see traders enthusiastically embrace a bullish stance and quickly add a lot of price premium.
In summary, tonight’s focus is primarily about weather and it should receive a universally bullish spin. Conditions seem well positioned to keep a firm tone at least into Monday night/Tuesday’s day session, as crop ratings are likely to show deterioration and forecasts don’t offer much likelihood of a wetter forecast developing soon. Expect price firmness and a quick return to last week’s highs. Probes above last week’s highs should be seen as legitimate producer selling opportunities—both 2008 and 2009 production.
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.
