Sunday Night Grain Outlook, 4-19-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, April 19, 2009
OPENING CALL:
Corn= 1-2 lower, Wheat= steady-easier, Soybeans= 3-5 lower.
Weather finds a general theme from private forecasters that will lead to favorable/timely spring planting opportunities during the next two weeks. The NWS 6-14 day forecast might suggest a bit more challenging situation.
News> Venezuela’s President Chaves says he is ready to send an ambassador back to the US and he is waiting for authorization from Washington to do so. Obama says the US is on a path toward changing its relationship with Cuba. President Obama will hold a full cabinet meeting Monday and will ask for specific plans to cut spending.
Wheat will lean lower on Friday’s late weakness that fuels continued heavy tone for corn and anticipation of a technical correction in soybeans. The wheat market doesn’t have troubled speculative long positions and isn’t likely to suffer from liquidation pressures. Chatter discussing wheat damage from past HRW freezes seems to be suggesting damage may have been more than originally suggested. Dry weather in the Black Sea region is also moving on to traders’ radar screens. Wheat seems least likely to be anyone’s favorite market to sell tonight/this week. Trade above Friday’s highs could begin to unleash a very significant short-covering event based on Commitment-of-Traders data that suggests a heightened sensitivity to short-chasing potential. Any weakness in wheat tonight should find limited ability to build sustainable downside energy.
Corn will start lower on continued weak price action and generally non-threatening weather spin. The trade believes producers will continue with acreage plans that will support the March 31st USDA projection, despite a net revenue shift approaching $100 per acre against corn versus soybeans since March 31st. I believe this assumption is wrong. Producers have proven during the past few years to have a much greater sensitivity to market/price signals when it comes to acreage decisions than most expected at the time. To think this sensitivity won’t be found when prices/profit should discourage corn production is a mistake. Current corn prices are too cheap in relationship to other markets.
Soybeans will start lower on expectations Friday’s late weakness and reversal-down action may be an indication that a technical correction may be ready to unfold. Interestingly, the old/new spreads didn’t show much desire for weakness Friday and may suggest there will be little ability to unfold a multi-day correction process. While there is no question technical indicators have been overbought/extended/stretched, sometimes market situations develop where such conditions are able to be maintained for a much longer period than any “textbook” scenario would suggest. The current soy-complex market has been and continues to suggest it may remain one of those situations. Consequently, there may be little ability to build downside momentum as the week progresses to any initial weakness tonight/tomorrow. IF soybeans rebound from an initial lower start and trade into positive territory, it will significantly reduce enthusiasm to initiate short positions in any market tonight.
In summary, bearish attitudes will initially abound tonight, but sustaining or building upon tonight’s weakness may be a difficult task as the week evolves.
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.
