Monday Night Grain Outlook, 9-7-09

Sunday Night Grain Outlook
By Duane Lowry
Monday, September 7, 2009

OPENING CALL:
Corn= steady-easier,     Wheat= steady-easier,     Soybeans= steady-easier.

Weather provides 80% moisture coverage of the Midwest during the 1-5 day window. No frost concerns exist through the next two weeks, with forecasters now anticipating frost-free conditions into at least early October. Moisture will be favorable for maximizing late season yield potential.     

News> The G20 appear to have agreed that it is time to develop exit strategies regarding economic stimulus measures, but not time to implement the plans. The CFTC released new and more detailed Commitment-of-Traders data Friday afternoon. Traders found a few surprises, but you can sense most are uncertain what implications/conclusions should be drawn from this new reporting profile. Personally, it appears to me that soon we will have so much information that it will be difficult/futile to attempt to find "an edge" for trading decisions from the report. In other words, it could become yet one more piece of traditional fundamental information that proves of little value beyond a talking point…but we will see.       

Wheat will start lower on weak price action and weak fundamental profiles. Trader sentiment has been quite demoralized and many have chosen to just not be involved. However, another sector of the trade has chosen to be the circling vultures, establishing short positions in expectation that the Index Fund longs would be forced to exit positions during the next few months. Friday afternoon's C-O-T data may make that bet a bit less certain. Short-term technical conditions are vulnerable to a short-covering event. I am suspicious we will find little follow-through to early week weakness, despite the same bearish fundamental profile. Shorts beware.                  

Corn will start lower on weak price action, weather/moisture conditions conducive to maximizing late-season yield potential and chart unraveling. Last week's performance was very weak and missed expected opportunities for a bounce. I am unsure how/if the new C-O-T data should have any bearing on trader decisions tonight/tomorrow.      

Soybeans will start lower on weak price action, slipping chart action and favorable/non-threatening weather conditions/forecasts that suggest optimum conditions for maximizing late-season yield potential. The C-O-T data appears to me to suggest more vulnerability to long liquidation than maybe some have been suspecting.                                

In summary, favorable late-season weather and overall weak price action appears to be enough to lean everything to the downside initially tonight. Wheat may be prone to a short-covering event soon unfolding. Corn and soybeans should continue to have a very bearish backdrop and any bounces be seen as limited in potential and sustainability. The pre-harvest peak/rally events are in the past and it may be that we have already entered the steadily declining price pattern fall into and maybe through the harvest season. Producers have a historically very small percentage of their expected production pre-sold.                  

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.