Sunday Night Grain Outlook, 6-14-09

Sunday Night Grain Outlook
By Duane Lowry
Sunday, June 14, 2009

OPENING CALL:
Corn= 3-5 lower,     Wheat= 2-4 lower,     Soybeans= 6=8 lower.

Weather produced showers favoring the western Midwest and northern Delta during the weekend. The next 5 days will produce near general coverage of 1/2-1 1/2, locally 3 inch rains in the Midwest. The overall Midwest forecast has a warming temperature theme, but any extreme heat will remain west of the Midwest. Moisture in the 6-15 day window will be rather limited, but with favorable soil moisture profiles, the drying conditions and warming temps will be excellent for the young plants. US row crops should flourish during the next two weeks if the current forecast verifies. Spring wheat areas will receive 85% coverage this week with beneficial moisture. Winter wheat harvest will be aided by warm and dry conditions. China received beneficial moisture during the weekend, with another major storm event seen late this week/next weekend. Western Australia has also found a needed/beneficial rain event in their forecast. Weather will receive a bearish spin.   

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Wheat will start lower in sympathy with weather-inspired weakness in the row-crops. New news is limited. Seasonal/harvest pressures will continue to weigh on wheat futures, which by many fundamental standards may still be overvalued. It remains difficult to find any sector of the trade that is willing to consider sponsorship of an ownership program at this time.                

Corn will start lower on favorable/non-threatening weather theme seen through the next two weeks. (See weather comments above.) Friday's price decline has longs on their heels and additional liquidation pressures seem likely. The spec community has been very top-heavy with their positions and we are in the time of year where liquidation activity can be very quick and very severe. Downside potential during the next 3 weeks remains very significant and the trade may be guilty of being caught completely off guard.

Soybeans will start lower on the lack of a weather concern amid faltering technical conditions that could spur sizeable liquidation activity during the next several days.                          

In summary, weather is too favorable/non-threatening on the vast majority of acreage and global weather also appears favorable/non-threatening/improved. Friday's price action has the longs on the defensive and this is the time of year where "trapped longs" without a weather story can produce severe liquidation pressures.