Sunday Night Grain Outlook, 4-26-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, April 26, 2009
OPENING CALL:
Corn= mixed, Wheat= mixed, Soybeans= mixed.
Weather is in the process of producing heavy rains and flooding in some areas. Too much rain is seen during the next two weeks with a very active weather pattern that will limit planting window opportunities for many/most regions. The 2-week forecast now goes out far enough that concerns should elevate very quickly.
News> Swing flu is filling the media waves, creating panic and hysteria for commodity traders. Many want to suggest reduced corn demand…this is ridiculous, but that doesn’t mean we won’t trade that mentality. Russia has banned pork imports from the US and Mexico, with some global watchers suggesting trade in general could be harmed by fears associated with the transmission of swine flu. There is no evidence to suggest consumers have any reason to fear pork consumption, but this business, nor the public, has ever let the facts get in the way of a good fear-based argument/reaction. Those wanting to focus on swine flu and global trade concerns will be bearish tonight.
Wheat will find mixed calls based on bullish weather influences and bearish swine flu arguments. This market is filled with speculative shorts that are beginning to come under pressure. Any positive trade in wheat tonight, whether it occurs initially or after a lower opening, could quickly generate aggressive short-covering activity.
Corn will find mixed calls for the same weather/swine flu arguments. The reality is that any pig on the ground now will eat and no producers will make long-term production decisions based on the current swine flu hysteria. There is no merit in the argument that corn should be bearish on swine flu, but that doesn’t prevent the masses from trading that fear initially. Weather is extremely troubling and should be seen as bullish. Any knee-jerk bearish price action tonight based on swine flu should be seen as a long-term buying opportunity, but there is nothing saying trade during the next couple of days couldn’t be volatile and irrational.
Soybeans will attempt to sort through the weather/swine flu rhetoric. There is also plenty of chatter that Argentina may be close to banning soybean exports, which should be seen as bullish soybean prices, specifically old-crop. New-crop soybean futures could suffer from weather and perceptions final soybean acreage could be on the rise. However, the size of the South American downward production revisions of the past couple months have reached the point where now even new-crop US/world S&D calculations warn that traders should no longer be worried about excessive supplies.
In summary, this afternoon is filled with elevated emotions and irrational conclusions. Yet, this is what moves markets. The initial reaction to the swine flu fears is bearish, but the longer-term sustainability of such negative implications lack merit. From that perspective, weakness tonight should be seen as a long-term buying opportunity. Weather is extremely troubling for timely corn planting progress. Expect crazy conversations and crazy price action. I suppose all this leads to some type of weakness tonight/tomorrow, but there will be a day in the future when we look back and label such weakness as having been quite a buying opportunity.
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.
