Sunday Night Grain Outlook, 3-7-10

Sunday Night Grain Outlook
By Duane Lowry
Sunday, March 7, 2010

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

Weather will provide warming temps in the US Midwest during the next 10 days, with ample moisture during the next 5 days.             

News> The chairman of China's primary grain trading company, COFCO, says global and domestic soybean prices are currently low and are unlikely to fall very much this year despite expectations of rising carryout levels due to record South American harvests. China's exports fell 16% last year.   

Wheat may lean easier on Friday's soft performance and lack of news, as traders prepare for Wednesday's USDA reports. However, short-term technical indicators do not seem conducive to encouraging new selling activity. Outside market tone will be the dominant influence tonight, with technical conditions quite capable of encouraging some short-covering activity.                             

Corn will also lean easier on Friday's week tone. However, any "sell-stops" were likely triggered by Friday's close. Trader sentiment seems mixed and skittish, easily influenced by the direction of the last tick. Long-term bears exist, but not as much as say 6 weeks ago. Bulls seem to believe the bearish rhetoric has been factored in and it is time for some spring seasonal "what if" price premiums to build. Traders seem more worried about bullish surprises in Wednesday's report and/or the acreage data on March 31st than about bearish surprises. Technical conditions are wounded after last week's trade, but lack any clear indication that would suggest the spring time peak has already been scored. I don't believe the spring time high has yet been established and I don't believe early week weakness will be able to build momentum or sustainability. Weather doesn't yet appear to provide clear influence to the trade, but it is nearing the top of the list for "after the fact" explanations of the day's price direction.       

Soybeans will lean easier on sort of "just-because" longer-term fundamental focused reasons. Short-term technical indicators are mixed, but could quickly encourage buying interest if given some supportive encouragement from outside market developments. Most traders are bearish, with arguments about timing more so than merit. It "feels" like we could easily trap some shorts and generate a short-chasing event.                                      

In summary, most will expect weaker markets tonight on last week's price action and I understand the logic for that. However, it has been a trap to sell weakness for several weeks and my sense is that pattern will continue. Overall longer-term conditions suggest downside vulnerability, but we have a long time for that to evolve and we may have too many bears at this time. I think prices in all markets can firm as the week evolves, possibly seeing wheat, corn and soybeans all challenge recent highs at some point during the next couple of weeks. Yet, part of this opinion is driven by my belief that gold and crude both have desires for more upside progression, suggesting it may be easy to encourage some "buy commodity" mentality that can lift the grain trade as well. Plus, right or wrong, bears are more nervous than bulls about the March 31st acreage data and we have more bears than bulls at the present time.                          

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.
© 2010 Duane Lowry. All Rights Reserved.