Sunday Night Grain Outlook, 5-10-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, May 10, 2009
OPENING CALL:
Corn= 2-4 higher, Wheat= 1-2 higher, Soybeans= steady/vulnerable.
Weather will provide the Midwest with more precip beginning Tuesday, with another event slated to start by the weekend. Planting windows during the next several days will be short-lived. Temperature patterns will be biased to the cool side for many acres during much of the 2-week forecasting period. For the 10th of May, this is not a very desirable weather forecast for either planting or early development. Planting conditions may improve steadily after the upcoming weekend, with temperature conditions beginning to improve past day 10 of the forecast.
News> USDA will issue their latest monthly Supply & Demand data Tuesday morning. Here are the trade estimates:
2008-09
Corn carryout= 1.711 bil avg, range= 1.645-1.879, April= 1.700
Soybean carryout= 130 mil avg, range= 86-148, April= 165
Wheat carryout= 687 avg, range= 655-700, April= 696.
2009-10
Corn= 1.383 avg, range= 1.129-1.720
Soybeans= 239 avg, range= 148-528
Wheat= 653 avg, range= 570-742
Wheat will start higher on follow-through enthusiasm from last week’s strong finish. New news is limited. Price action has already triggered a lot of short-covering activity, possibly limiting additional upside energy potential from that type of activity. Short-term technical indicators are stretched and may have a difficult time building upon or sustaining early week strength. Wheat/corn spreads may have moved enough/too much in favor of corn. Some sectors of the trade will consider wheat strength tonight to be a selling opportunity.
Corn will start higher on spillover buying enthusiasm from last week. Weather still offers difficulty advancing corn planting in eastern and southern regions. Cool temperatures will be the bias for many areas during much of the next 10 days. Temperature and moisture conditions should improve next week forward. However, there should no longer be much debate about having too many acres planted too far past their optimum planting date. With this growing revelation in the trade comes increasing concern that national yield potential should be shaved, setting the stage for a supportive backdrop into the June 30th acreage data. Trade sentiment has significantly shifted towards the bullish side in corn, likely creating a solid and building interest to buy short-term price setbacks. You can also sense an evolving thinking in the trade that final acres will be less than most have been anticipating all spring, possibly by a notable amount.
Soybeans may lean higher in knee-jerk sympathy with corn. There remain solid expectations that Tuesday’s USDA S&D data will also be bullish, thus providing support as well. However, this has certainly been expected for some time and it is also quite possible that any knee-jerk bullish reaction to Thursday’s data could also trigger “sell the fact” trade mentality. Some are also beginning to ratchet-up soybean acreage ideas, weakening the overall trader enthusiasm towards soybeans. Expect some sectors of the trade to begin searching price strength for selling opportunities. While some short-term strength potential exists, I wouldn’t be very trustful of any strengthening attempt during the next few days. Technical conditions appear very vulnerable to a notable price correction.
In summary, some will see the small but existing planting windows. Some will see the two moisture systems during the next week. Some will see the “too cool/too delayed” overall theme for the start of the 2009 corn growing season. I think the proper summary looking forward should be the following:
1) Corn acreage ideas will only diminish from current levels into the June acreage report.
2) Soybean acreage ideas will climb.
3) National corn yield potential calculations will erode for a while, justified or not.
4) Corn technical conditions have potential to build additional upside momentum and small price breaks will find buying interest building under the market from multiple sectors of the trade.
5) Soybean price action has shown many culmination and distribution signs lately, suggesting we should expect a lack of ability to build/sustain any short-term price strength attempts during the next several days.
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.
