Sunday Night Grain Outlook, 8-16-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, August 16, 2009
OPENING CALL:
Corn= 1-2 lower, Wheat= 1-2 lower, Soybeans= steady-easier.
Weather will provide 85% coverage of the Midwest during the next 5 days and 70% coverage of the Delta. While moisture concerns in China and India have been talking points and still exist, an improved moisture expectation exists in both areas during the next 10 days.
News> The National Pork Producers Council says they will be announcing Monday a public plea for "immediate financial assistance" from the government. The New York Times article says half way through the back-to-school shopping season retail professionals predict the worst sales performance in more than a decade, as consumers choose to keep old backpacks and old greenbacks. Aug & Sep "same store sales" are seen falling 3-4%. The National Retail Federation expects the average family with school-age children will spend nearly 8% less this year. Another research company is cited predicting a 10% decline. July "same store" retail sales fell 5% from last year, according to the article, while citing government figures released last week showing overall retail sales in July were down 8.3% from the same month last year.
Wheat will lean lower on expected row-crop weakness. Short-term technical indicators will limit follow-through selling energy, setting the stage for short-covering activity if soybeans can show some stability on overdone ideas.
Corn will lean lower on non-threatening weather and the overall bearish fundamental profile. Here too, short-term technical indicators may not inspire additional selling energy after any early weakness. All things considered, Friday's price wasn't as weak as many expected. If soybeans offer some "sold out" signs early in tonight's trade, corn may experience some short-covering activities.
Soybeans may be called lower on favorable weather expectations and general "just because" demoralization sentiment after last week's performance. However, short-term technical conditions are not conducive to inspiring selling energy and it is not an unreasonable assessment to say the near 90-cent decline from Thursday's high to Friday's low is just too much too fast. Fundamental soybean assessments remain two-sided, with the demand storyline certainly not weakened by declining prices. Chinese interest in US soybeans is expected again early this week.
In summary, we seem likely to see all markets start lower on poor price action bearish fundamental profiles. However, short-term technical indicators may limit downside follow-through potential at this time. The overall outlook during the next few months is for trending lower prices, but that doesn't mean we will be down every day. Short-term technical considerations offer some hope of a minor corrective bounce during the next couple days. We will see. Outside markets appear to be moving towards the "deflation" argument that I have discussed often during the past few weeks, as consumer data is just not constructive or inflationary. If true, this will be another heavy burden on all commodities in the months ahead. Producers need to view any small 1-2 day corrective bounces as selling opportunities.
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.
