Sunday Night Grain Outlook, 3-29-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, March 29, 2009
OPENING CALL:
Corn= 1-2 higher, Wheat= steady-better, Soybeans= steady.
Weather offers a wet theme for the US Midwest during the 6-15 day period. The US Plains also has a wet forecast theme for the period. Expect traders to begin increasing concern and focus on these wet longer-term Midwest forecasts. It would seem that the wheat has already liquidated and thus discounted any bearish weather spin. Weather focus will be primarily on the Midwest and will therefore receive a bullish spin tonight.
News>
USDA Report data will be released Tuesday morning: Here are the trade estimeate>
Quarterly Stocks:
Corn= 7.003 avg, range= 6.888-7.146, March 2008= 6.859
Soybeans= 1.322 avg, range= 1.295-1.353, March 2008= 1.434
Wheat= 1.062 avg, range= 0.980-1.113, March 2008= 0.709
Prospective Plantings:
Corn= 84.548 avg, range= 81.4-89.00, 2008= 85.982
Soybeans= 79.251 avg, range= 75.90-81.5, 2008= 75.718
All Wheat= 58.856 avg, range= 56.70-63.00, 2008= 63.147
Spring Wheat= 13.639 avg, range= 13.00-14.007, 2008= 14.135
Durum= 2.622 avg, range= 2.20-2.80, 2008= 2.731.
Wheat will slightly higher on ideas the pre-report flushing of longs has largely ran its course. The current US Plains weather situation/forecast seems largely digested. Technical conditions are poised to consolidate as a worst-case scenario. Pre-report positioning should keep activity limited, but maybe with a slight upward bias.
Corn will start higher on a wet theme to the 6-15 forecast window for the US Midwest. New news is limited. Overall technical price action has been resilient, despite falling wheat and soy values and technical conditions typically conducive to corrective weakness. IF values experience trade below Friday’s values this week it should be of limited scope and duration. USDA data that will be released Tuesday, to me, has a lot of potential to create bullish fervor, but limited ability to create news that can generate much downside enthusiasm. The technical profile suggests limited downside potential below last week’s lows. So far, nothing has occurred during the past 30 days to trigger widespread desires to increase corn acres from what has appeared to me to be a very discouraged move away from corn in 2009. If USDA confirms producer intentions to shun corn acreage this year, the market has a significant and maybe difficult job to accomplish—entice producers to plant more corn, despite high input costs and pessimistic/nervous views towards the entire economic situation. To accomplish such a feat, if it is deemed necessary, may require futures to rally by 50-75 cents or more. Any trader sense that timely planting activity will be threatened will further heighten the sense of this “mission”. What sector of the trade will want to be short corn into the Tuesday report? We seem poised for strength tonight?
Soybeans may find mixed-easier calls tonight on poor price action to finish last week and on wet US Midwest weather forecasts. However, it would seem that most of any long liquidation necessities before Tuesday’s report has likely been accomplished. Generating follow-through selling early this week to any weakness that may develop tonight may prove difficult. At this point, traders are probably hoping for a knee-jerk bearish reaction Tuesday morning on ideas that may create a buying opportunity.
In summary, I see the wet tone to the longer-range Midwest forecast as a likely talking point, amid a backdrop that doesn’t seem likely to encourage selling in corn prior to Tuesday’s USDA data. With wheat and soybeans likely having accomplished most of its pre-report liquidation desires, it seems to me that the path of least resistance tonight/tomorrow will be to the upside.
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.
