Sunday Night Grain Outlook, 2-22-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, February 22, 2009
OPENING CALL:
Corn= steady-better, Wheat= steady-better, Soybeans= mixed.
Weather provided widespread beneficial moisture to Argentina during the weekend. The US hrw wheat region looks to be dry during the next 10 days, with some improved moisture potential found in the 11-15 day window.
News> Secretary of State Clinton says China’s leaders are still confident in the US Treasury bonds and she expressed the US appreciation for China’s investments in the US. Clinton said the US and China economies are interconnected and a growing US economy is essential to Chinese exports. China is the single largest holder of US Treasury bills, with $696 bil, followed by Japan’s $578 bil. China’s Foreign Minister indicated China would not deviate from its current US Treasury policies.
Wheat will find mixed expectations tonight. News late Friday that China purchased 30 tmt US soft red winter wheat will raise a few eyebrows and ponder the potential of a more prolonged plan for wheat imports. Dryness in the US Plains remains a concern that will gain more traction as temperature patterns warm-up. News Egypt bot all Russian wheat may be seen as disappointing. Friday’s price action was encouraging, as technical conditions remain oversold and primed for a more multi-week rally phase. Thus, Friday’s ability to settle 15 cents above the day’s low will inspire increased technical buying interest to build under the market, limiting any ability to build downside momentum in a very sold-out market. The sharp decline in the US $ Friday and a sense that stock indexes may be undervalued may find macro markets offering influence this week. Any early week weakness should be seen as a buying opportunity.
Corn continues to have few friends, but the liquidation of longs process that started early last week appears to have largely run its course. Cash basis tone is firm. Producer selling activity is limited. Technical conditions are oversold. Here too, Friday’s weakness in the US $ and late corn price recovery to finish nearly 9 cents off the day’s low will be seen as supportive, encouraging tech-related buying interest to build not too far below Friday’s settlement price. Any early week weakness should find limited interest in pressing the short side and increased bottom-picking activity from multiple market sectors.
Soybeans will find some bearish attitudes on very beneficial and widespread rains in Argentina during the weekend. Technical conditions are very oversold. New news is limited. This market seems too technically oversold to be able to build much downside momentum from any early week probe below Friday’s finish.
In summary, encouragement can be found in oversold technical conditions and Friday’s ability to finish well off the day’s lows, as well as topping action in the US $. Economic doom & gloom may have peaked last week, with some opportunity for improved spin this week, as President Obama will speak to Congress this week. Seasonally, it is time to begin to expect some spring time price optimism. Significantly oversold technical conditions and the recent flushing of long positions seem to create a good opportunity to expect improving price prospects in the weeks ahead.
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.
