Sunday Night Grain Outlook, 1-10-10

Sunday Night Grain Outlook
By Duane Lowry
Sunday, January 10, 2010

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

Weather proved cold temperature damage to parts of Illinois and Kansas wheat acreage, producing up to 20% losses on the acres affected, which will be less than 5% in terms of national potential. South American conditions/forecasts remain exceptional, with only brief periods of heat and a good mixture of moisture and dryness across all of Brazil and Argentina.           

News> Boston Federal Reserve President Rosengren says he expects home mortgage rates could increase 3/4% by spring, as the Fed ends its subsidy of the housing market by March 30th. Venezuela devalued their currency.

*Tuesday USDA will issue monthly S&D, final 2009 production and winter wheat acreage data.
*Winter Wheat Acreage estimates:
All Winter Wheat= 40.916 mil avg, range= 38.387-43.5, 2009= 43.111
Hard Red Winter= 30.414 avg, range= 28.977-31.572, 2009= 31.649
Soft Red Winter= 6.975 avg, range= 5.860-8.059, 2009= 8.309
White Winter= 3.505 avg, range= 3.20-4.50, 2009= 3.533

*2009 Corn and Soybean Production estimates:
Corn= 12.819 bil bushels avg, range= 12.50-12.996, Last Month= 12.921, 2008= 12.101
Soybeans= 3.337 avg, range= 3.219-3.420, Last Month= 3.319, 2008= 2.967
*2009 Yield estimates:
Corn= 162.5 avg, range= 160.0-164.5, Last Month= 162.9, 2008= 153.9
Soybeans= 43.4 avg, range= 40.0-44.7, Last Month= 43.3, 2008= 39.7

*2009/10 Carryout estimates:
Corn= 1.613 avg, range= 1.424-1.731, Last Month= 1.675, Last Year= 1.674
Soybeans= 237 mil avg, range= 170-329, Last Month= 255, Last Year= 138
Wheat= 905 mil avg, range= 800-955, Last Month= 900, Last Year= 657

*Quarterly Stocks estimates:
Corn= 10.663 avg, range= 10.130-11.390, Year-ago= 10.078
Soybeans= 2.411 avg, range= 2.377-2.449, Year-ago= 2.276
Wheat= 1.760 avg, range= 1.695-1.809, Year-ago= 1.422

Wheat will start lower on ideas Friday's gains were overdone and amid belief weekend cold damage was less than feared and inconsequential against an excessive supply backdrop. Pre-report positioning and short-term technical indicators will likely produce a weak bias tonight/tomorrow.                          

Corn has little for new news. Price action and pre-report positioning will produce buying interest on weakness. Once the Tuesday's report has been will released, it will be difficult to avoid "sell-the-fact" trade reactions to any "bullish" report spin.      

Soybeans will lean easier on favorable South American weather and generally weak price action of late. However, short-term indicators are oversold and some short-covering before Tuesday's reports seems like a reasonable expectation. Technical conditions will encourage some buying interest on weakness. We seem capable of trading on both sides and possibly could see a decent corrective bounce before Tuesday morning's USDA data.                                   

In summary, there is little for new news and trader sentiment is very much in a pre-report mode, with limited conviction about the report and mostly looking to downsize risk exposure. This may lead to some initial weakness, but soybeans seem poised for some short-covering activity before Tuesday's reports.                          

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.