Sunday Night Grain Outlook, 3-8-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, March 8, 2009
OPENING CALL:
Corn= mixed-better, Wheat= mixed, Soybeans= mixed-better.
Weather offers limited precip in the western ½ of the US hrw wheat region through the next two weeks. However, the eastern half of the region has a wetter forecast than Friday’s outlook. Weather forecasts are certainly far from unanimous and today’s NWS 6-15 day discussion actually seems drier than Friday’s overall forecast tone. I think today’s forecast, at a minimum, producers buying interest under the market.
News> The Wall Street Journal carried an article discussing the push by a pro-ethanol trade group, headed by retired Army general Wesley Clark, for the EPA to increase the allowable blend of ethanol to 15% from the current 10%. The group says it will be the only way the US will be able to meet the congressional mandates for renewable fuel by 2022. The trade group says the Energy Department’s own study has revealed blends as high as 20% didn’t significantly change emissions levels and “no operability or drivability issues were identified.” EPA officials have recently indicated the decision could take several months.
Wheat will find mixed trader assessments of weather forecasts. Overall price action is favorable, but some will see Friday’s gains as a bit overdone. Expect technical buying interest to build under the market during the next several days, limited sustainability of any near-term weakness. I am not sure how we open and trade on both sides seems quite reasonable, but I am confident that the trade will begin to believe we have turned a corner, which will produce increasing buying interest under the market.
Corn will also find increasing technical buying interest build under the market, but I am not sure what we are to believe are the key inputs impacting tonight’s opening direction. Fundamental interest in buying this market may also be able to quickly build if overall price action tone improves, as we have closet bulls that have concerns about 2009 US corn acreage and those seasonal bulls that will be quick to see the need for adding some “what if” price premium to current values both before and after the March 31st USDA Planting Intentions report. Any weakness tonight, if it occurs, should be well supported.
Soybeans will benefit from firm US/global basis values and overall supportive technical conditions. It may not take too much additional strength to trigger notable short-covering activity. Any weakness will be well supported.
In summary, we have many markets that are on the verge of unfolding supportive price action that will fuel increasing buying energy towards agricultural markets. Friday’s late recovery in the DOW and firm crude oil values, as well as a weakening US $ all bode well for triggering both short-covering and new buying energy to surface in the grain trade. US Plains weather will find mixed assessments. Overall technical conditions of the grain/soy markets are favorable and will encourage buying interest on any weakness, if the weakness even occurs. If the outside markets are quick to build upon Friday’s late recovery, grain traders could take that as a cue to quickly accelerate their buying interest. Overall we are poised for a firming price trend to unfold during at least the next several weeks.
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.
