Monday Night Grain Outlook, 2-15-10

Sunday Night Grain Outlook
By Duane Lowry
Monday, February 15, 2010

OPENING CALL:
Corn= 1-2 higher,     Wheat= 1-2 higher,     Soybeans= 2-3 higher.

Weather provided favorable weekend rains for Argentina. Frequent showers will keep Brazilian soybean harvest activity slow.             

News> Chinese futures markets are closed this week due to the Lunar New Year holiday. Weekend Greece developments lacked clear conclusion, but appeared to be moving in the right direction. Help appears likely, but pressure is being applied to Greece to show action on their end before a detailed plan of help is offered. Interesting to note that weekend news wires reported Goldman-Sachs was involved in Greece, creating for them an extremely complex derivatives package, with details of its impact on the Greece financial problems not clear.

Wheat should find good tech buying surface early, limiting any weakness potential and possibly/probably generating strength immediately. New news is limited. This market is poised to soon find more aggressive short-covering activity. There is a resurrecting storyline that wants to buy commodities again, with gold up $11 as of this writing from Friday's finish we may see this attitude elevate.                            

Corn should also find tech-based buying enthusiasm surface this week, limiting any ability to build downside momentum. Overall performance the past several days has exceeded popular expectations multiple times and after weeks of building bearish sentiment, we may be on the verge of a more aggressive short-covering atmosphere. Just to offer perspective, a mere 10-cent gain from Friday's levels would equate to the highest values seen in the last month. The trade is also beginning to shift greater attention towards acreage discussions, with some suggesting a firm tone may be warranted to achieve the desired 3 mil acre increase from last year. Some are also anxiously awaiting USDA's March "resurvey", pondering potential for a reduction in final 2009 production. Still others are focused on low test weight/poor quality influences and ponder the idea livestock feeders will require more volume to accomplish the same results. All these storylines and technical indicators seem set to converge to fuel short-covering activity this week.      

Soybeans will find support from technical sectors, along with some fundamentalists focused on continued slow Brazilian harvest expectations due to frequent moisture systems. Price action has performed better than most expected on several occasions during the past several days, setting the stage for a more aggressive short-covering phase, as we are nearing the highest values of the past 3 weeks despite increasing bearishness from multiple market sectors during the past few weeks. Longer-term resistance exists in layers above the market, but the next zone appears to be approximately 15 cents above Friday's finish.                                    

In summary, with China absent on a weeklong holiday, most markets will lean towards technical conditions for direction. The Greece situation's peak fear level appears to have been attained last week, allowing commodities to recover some support. Grain price action the past several days has been quite resilient and able to reject periods of price fears associated with outside markets. Technical conditions have been suggesting more upside potential. We also can find resurrecting enthusiasm to "buy commodities", as gold continues to lead a corrective recovery. It looks to me that we could experience a more aggressive short-covering event this week in many markets.                          

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.