Sunday Night Grain Outlook, 10-05-08
Sunday Night Grain Outlook
By Duane Lowry
Sunday, October 5, 2008
OPENING CALL:
Corn= 1-3 lower, Wheat= 1-3 lower, Soybeans= 3-5 lower.
Weather will create some temporary harvest disruptions during the next two weeks.
News> The UK’s Brown says he will propose a 12 bil pound fund to help small businesses deal with the financial crisis. Actually, this money had already been committed about a month ago, but now Brown says it is time to release this money earlier than originally planned. UK’s Darling said the government is prepared for some “pretty big steps” to help the economy and the banking system, with fresh announcements to come in the near term. At an emergency meeting in Paris, French, Italian, German and British leaders agreed to coordinate national responses to the global credit crisis. The meeting produced one ground rule: EU countries won’t allow a large bank to fail. Late Sunday afternoon the US $ is higher against the Euro.
Wheat will start lower on the momentum of the trend. New news is limited. Fundamental profiles remain bearish.
Corn will also start lower on the default setting and momentum of the trend. New news is limited. Seasonal weight of harvest as well as a firm US $ will also provide the initial downside energy. Technical conditions are severely oversold. Producer selling interest is extremely limited. I do not expect early week weakness to be able to build downside momentum, nor be sustained all week. Weakness tonight should be seen as a buying opportunity.
Soybeans will start lower on downward momentum, a strong US $ and the seasonal weight of harvest. Finding follow-through selling energy should be difficult. Technical conditions are severely oversold and not likely to inspire willingness to establish new short positions. Producer selling interest is non-existent. Yield reports continue to suggest we may see further shaving of private and USDA national yield projections.
In summary, it is not too difficult to build a fundamental case for finding “value” at current values, possibly even saying they are “too cheap”. However, any argument that seeks to find value at a certain point must also find financial and energy markets stabilizing as well. When crude stabilizes and begins to offer signs of wanting to stage a corrective rally we will then have all cylinders operating together to create a notable corrective price rally in the grains. These conditions could mesh together very soon.
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.
