Sunday Night Grain Outlook, 1-31-10

Sunday, January 31, 2010

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

Weather provides favorable increasing moisture expectations for Argentina and drying forecast in Brazil to improve harvest expectations.            

News> China and US relations are under stress from a US decision to complete an arms sale to Taiwan, with China announcing trade retaliations against companies involved in the military equipment sale to China.

Wheat will start easier on weak price action amid bearish fundamental profiles, as many attempts to expect a technical-based recovery event have failed.                          

Corn will start easier on weak price action and demoralized trader attitudes.      

Soybeans will start lower on spillover bearish reactions to Friday's weak performance.                                   

In summary, the main news tonight will be increasing tensions between China and the US and possible implications to global trade. Favorable South American weather will also add to the bearish sentiment. Technical conditions remain oversold, but have been for some time with the only relief from the down trend measured in "pause time", as opposed to measurable corrective price movements. We are about to begin the important month of February, when producer insurance price protection levels will be determined. Producers have seen most of the favorable profit opportunities evaporate in the past several weeks, with fears now that insurance will do little more than offer protection at a level that is still below the cost of production for many operations. The mood is extremely bleak across an expanding cross-section of the commodity trading world. Having said all that, technical conditions are extremely oversold and trader sentiment is quite demoralized. Such situations usually signal an imminent correction event.                          

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.