Sunday Night Grain Outlook, 10-4-09
Sunday Night Grain Outlook
By Duane Lowry
Sunday, October 4, 2009
OPENING CALL:
Corn= steady-easier, Wheat= steady-easier, Soybeans= steady-easier.
Weather during the weekend produced 30% coverage of the Midwest with mostly light precip. Precip through Friday will produce 70% coverage. The 6-15 day outlook offers a much drier theme, except maybe for the southern Ohio Valley. The Delta will experience continued harvest delays, with general coverage seen this week including some heavy precip totals. Weather spin will be mixed, with those focusing on this week seeing concerns, with those focusing beyond this week saying we will eventually get more aggressive harvest activity. Compared to Friday, weather alone shouldn't be something that promotes selling activity early this week. Some freeze activity did occur this weekend in NE, western IA, and southern SD. We appear to have freeze potential for most areas of the Midwest by early next week.
News> The US FDIC head Sheila Bair says we must push to end the "too big to fail" doctrine. Bair also called for strict oversight of businesses including hedge funds and insurance firms. The French Finance Minister says we need more control and regulation of commodity markets.
Wheat will lean lower on generally weak price action. New news is limited. Short-term technical indicators may suggest some potential exists for a short-covering attempt. While longer-term downside potential remains and could possibly be significant, I wonder if we may experience a difficult to explain short-chasing event. Inter-market spread relationship with corn is at a historically interesting level that may cause some to begin looking for buying opportunities in wheat, at least from a relationship perspective. If true, this is the type of situation that could help to prompt the short-covering event. Yet, overall this market remains one that most prefer to ignore.
Corn will lean lower on Friday's performance and the threat it spurs additional tech-based selling pressures. Harvest slowdown concerns will still be on the talking point list. Traders are beginning to understand/respect the idea that while scope may be debatable, seasonal harvest pressures remain in front of us. Trade on both sides is possible tonight, but expect increasing selling interest on small bounces.
Soybeans will find mixed trader expectations. Those focusing on this week's weather may see weather concerns as supportive. Some will see Friday's sharp losses as possibly overdone and due for some corrective activity, limiting the ability of any initial weakness this week, if it develops, to build downside momentum. Outside markets will be watched closely. Overall technical conditions will inspire selling interest on rallies. Some will build the case that respect for the upcoming USDA report and lack of aggressive harvest activity this week will be enough to limit downside follow-through, while others point to growing confidence of a large US crop and significant longer-term downside potential. While I am certainly bearish, it won't surprise me to see some mild recovery attempts early this week.
In summary, overall conditions will definitely build selling interest above the market and limit sustainability of any early week recovery attempts. However, harvest delay rhetoric and short-term oversold conditions could prompt attempt at recovery.
