Sunday Night Grain Outlook, 1-3-10

Sunday Night Grain Outlook
By Duane Lowry
Sunday, January 3, 2010

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

Weather produced widespread coverage in Argentina during the weekend. The two-week forecast continues to provide favorable conditions/weather for South America. Weather, while not providing day-to-day price influence, remains a clear bearish backdrop and we are poised for exceptional and likely record yields over much of South America.         

News> Weekend comments by the Fed seemed to support the general theme from recent CFTC comments that increased regulation will be used and supported as a way of limiting commodity speculation that drives unmerited inflationary pressures.           

Wheat has little news to trade. Technical conditions are poised to resume downtrend activities. The fundamental backdrop remains decisively bearish.                          

Corn will start lower on Thursday's weak finish and questions about the extent of new commodity buying energy. Traders will be worried about "sell the fact" mentality. Fundamental support remains questionable, but traders will be nervous about any fundamental embrace until USDA issues their final production estimates. Technical indicators are poised for a sell-off.      

Soybeans will start lower on favorable South American weather and expected follow-through to Thursday's late weakness. Technical conditions are poised to support increased selling pressures. Expectations about speculative buying activity are mixed, with most fearful of establishing a short position on weakness. Fundamental conditions remain bearish.                                   

In summary, I see no reason to be higher, but we must respect the potential for both sides as traders debate money-flow potential in the New Year. For the most part, I believe the last few weeks has seen reduced selling pressures and some spec buying interest on the belief that new buying energy would be impressive after the first of the year. I expect more aggressive selling activity to develop from both the producer sector and the traditional grain trading sector. I think we may also find long liquidation quickly develop if we experience much weakness.                         

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.