Sunday Night Grain Outlook, 12-21-08
Sunday Night Grain Outlook
By Duane Lowry
Sunday, December 21, 2008
OPENING CALL:
Corn= mixed, Wheat= mixed, Soybeans= mixed.
Weather appears similar to Friday’s expectations. Some rains are falling in Argentina and will move into southern Brazil.
News> The Obama transition team says the size of the stimulus plan continues to grow and will likely exceed $775 bil as it works its way through Congress, with the goal now to create/save 3 mil jobs instead of the original 2.5 mil.
Wheat has little news to discuss. Traders seem anxious to expect some technical corrective weakness after a very steady and continual $1+ rally during the past 9 trading session, with Friday’s weakness seen as the correction’s beginning. It is difficult to argue with that expectation, but the wheat price has rallied at least 50 cents since that argument became popular. While we may start easier, I am a bit skeptical about the ability to build downside momentum.
Corn will lean easier on trader bias to be bearish and hope Friday’s weakness was the beginning of what bears perceive to be an overdue correction of recent unwarranted gains. Good technical support should be found near/just below Friday’s close. I question the ability to build downside momentum to Friday’s weakness and won’t be surprised to see prices again test last week’s highs during this week’s trade.
Soybeans will find some bears on developing rains in Argentina and southern Brazil. Yet, today’s weather assessment is not much different than last week’s expectations. Outside markets will be the key to the soybean complex. Crude oil appears ready for a rally. The US $ may find it difficult to build upon Thursday and Friday’s corrective bounce. Technical indicators offer mixed signals. It is seems easy and popular to look for a price correction, but the market has been outperforming expectations for several days. I will expect more price strength to unfold in the days ahead.
In summary, most expect weakness tonight/this week. However, overall price action has been outperforming expectations for 2 weeks. Crude oil and the US $ will be very important grain price motivators during the next several days. Crude seems poised for an overdue corrective price rally and the potential for it to be notable seems real. Expect good buying interest to be found under the grain market, with the question being whether selling surfaces to take values towards this buying interest or whether grain prices continue to outperform expectations and march higher again. If crude begins a rally phase, grains will rally as well.
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.
