Sunday Night Grain Outlook, 11-9-08
Sunday Night Grain Outlook
By Duane Lowry
Sunday, November 9, 2008
OPENING CALL:
Corn= steady-better, Wheat= steady-better, Soybeans= steady-better.
Weather cause any US harvest activity from here forward to face cooler temps and more frequent precip patterns, with the second week of the forecast period becoming quite wintry. From a “market-influencing” perspective weather remains a non-event. It appears weather will be a “space filler” until a South American weather story develops.
News> China announced a major stimulus program, up to $586 bil during the next two years. The Chinese move was seen as impressive, much larger than expected and announced earlier than expected. US House Speaker Pelosi is pushing for another stimulus package to be released in two stages--$100 bil yet this month and $100 bil early next year. Some are urging for at least a $300 bil stimulus. Brazil’s Finance Minister says the government’s focus has shifted away from inflation and towards stimulating economic growth. Canada’s Finance Minister expects more countries to soon announce stimulus packages. The incoming Chief of Staff for Obama, Rahm Emanuel says Washington needs to quickly move to support the US auto industry and help it retool to develop more fuel efficient autos. G-20 leaders will meet in DC Nov 14-15.
Wheat will start near unchanged on a lack of news. There seems to be little technical-driven influence to encourage selling activity tonight. Any pre-report positioning that may be necessary would likely be short-covering. Outside markets should find assurance and support from all the talk of new stimulus packages from what appears to likely be an expanding list of countries.
Corn has been bracing for/expecting bearish data from USDA for some time. This has kept potential buyers on the sidelines. If there is any position-squaring left to be done before tomorrow morning’s report it would seem to be short-covering. Talk of many global stimulus packages, especially China’s very large package announced this morning, should encourage supportive price action from the outside markets. Crude oil should be establishing a major bottom, with a corrective rally back towards the $80-90 zone a reasonable possibility during the next several months. Many commodities show signs that a significant bottoming process has been occurring during the past few weeks. There seems to be many on the sidelines hoping for a chance to buy any knee-jerk bearish response to tomorrow’s USDA data. From an anecdotal perspective, there sure seems to be a marked absence of fall-applied nitrogen taking place. While there may be many different reasons for this, the result is the same—it will be difficult to maintain a proper amount of 2009 US corn acres with the current inter-market price relationships amid the very high input cost structure. This type of thinking makes current US corn futures prices appear too cheap.
Soybeans will find encouragement from Friday’s price action and trader bias to brace for supportive USDA data tomorrow morning. The outside market storyline discussed in the wheat/corn comments above will also provide support for soybeans. Trade on both sides is possible, but there should be limited interest in establishing new short positions before tomorrow’s report.
In summary, there are few short-term technical signals that will inspire selling activity tonight. Pre-report positioning would seem to favor short-covering over long liquidation. Increasing stimulus plans from several countries, especially a very large package announced today by China should also provide a supportive tone tonight.
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.
