Sunday Night Grain Outlook, 2-1-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, February 1, 2009
OPENING CALL:
Corn= mixed, Wheat= mixed, Soybeans= mixed.
Weather produced only light rain amounts and limited coverage in Argentina, but mostly in line with Friday’s expectations. Argentina will receive light precip amounts early this week and again next weekend. The longer-range maps offer mixed expectations, but some concern of an overall drier pattern. I don’t see weather today as being much different than Friday’s expectations. Some will spin it as bearish due to rains falling now. Others will say moisture levels will not be enough to reverse existing damage and question if national production will stabilize.
News> USDA Friday afternoon released its semiannual cattle inventory report that showed all cattle at 98% of last year, well below the 98.9-99.6 range of estimates and average of 99.3%. USDA data says the US cattle inventory is the lowest since before 1960. Argentina’s Buenos Aires Cereals Exchange again lowered its soybean acreage estimate to 17.75 mil hectares, down from 17.9 mil announced last week. They said that while rain fell last week it wasn’t enough to reverse a situation of “acute scarcity” of soil moisture. Last week the exchange pegged 2008-09 soybean production at 34.5-38.2 mmt, far below last year’s 46.2 mmt and the last USDA projection of 49.5 mmt. The exchange pegged corn acreage ot 2.38 mil hectares, down from last year’s 3.2 mil. Their latest corn production estimate is 12.3-13.7 mmt, far below last year’s 18.5 mmt. USDA’s latest estimate is 18 mmt. Many say it is now too late to improve Argentina’s corn production estimate, regardless of future rain events. The US Senate begins debate on the stimulus plan Monday.
Wheat will respond to corn and soybean reactions to weather, but any weakness should find limited ability to generate follow-through to Friday’s late weakness. New news is limited. Expect good buying interest to surface tonight/this week.
Corn will find mixed reactions to weather, but I don’t expect to find anyone very willing to press the short side too hard. Expect good technical buying interest to surface. Expect outside speculative investor appetite to probe the long side of agricultural commodities to also increase this week. Weakness tonight, if it occurs, should be a good buying opportunity .
Soybeans will find mixed weather spins. Expect increased technical buying to surface on weakness. Technical conditions seem poised for price strength this week. China returns from holiday, which may provide demand support as well.
In summary, multiple expectations exist for tonight’s early trade. I expect technical buying to surface on any early weakness, with trade above Friday’s highs quickly accelerating buying interest.
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.
