Sunday Night Grain Outlook, 3-21-10

Sunday Night Grain Outlook
By Duane Lowry
Sunday, March 21, 2010

OPENING CALL:
Corn= steady-better,     Wheat= steady-better,     Soybeans= steady-mixed.

Weather provides mostly dry weather for the northwestern Midwest until the weekend. The rest of the Midwest will experience ample moisture opportunities during the next two weeks. Weather may provide a supportive theme.              

News> Germany says it and Greece as well do not believe Greece needs an aid package at this time. Democrats say they have reached a deal with Sen. Stupak and his supporters to have President Obama issue an executive order that will ensure the status quo on abortion remains and thus satisfy their concerns about any federal funding used for abortion, allowing them to support current health insurance legislation. Tensions and disgust levels seem to be rising amid US companies attempting to gain access to China's consumer markets, as the American Chamber of Commerce in China appear to be increasing lobby efforts  in Washington become more engaged with China on trade issues, risking trade tensions with China.   

Wheat has little news to digest. Technical conditions are not conducive to building downside momentum. If corn begins to build upon last week's gains, which seems quite possible/probable to me, it may be enough to begin a notable short-covering process in wheat. I see limited opportunity to build downside momentum this week and have conditions that possibly could trigger energetic short-covering energy if last week's highs are violated, which are approximately 15 cents above Friday's finish.                             

Corn performed better than most expected last week. News is limited, but you can sense a building unease among shorts. While few seem to express desires to be bullish, many look at the fundamental foundations/expectations and conclude that corn may be the least favorite place for bears to express their sentiment. When Informa lowered their corn acreage estimate Friday from last month's projection it seemed to also elevate the unease with current short positions. Technical conditions are supportive. Fundamental anxiety towards the March 31st report may be rising, setting the stage for additional short-covering energy to unfold during the next two weeks. And of course we shouldn't forget to include concerns about spring weather delays. It appears to me that we are poised for strength this week. Any weakness tonight, if it occurs, should be limited.        

Soybeans will struggle to determine proper focus. Bears spent all last week pointing to expanding South American harvest and eventual long-term bearish fundamental profiles. However, soybean price action was firm and clearly better than most expected. Traders now look to the stocks data from USDA March 31st and fear old-crop stocks could be much tighter than once believed. Technical conditions are supportive. Overall tone appears to be one where we are chasing too many long-term bears holding positions with short-term equity. Any weakness this week should be well supported and I am inclined to believe we will continue to push higher and trigger expanding short-covering energy.                                      

In summary, I find few real reasons to be higher, but I find many indications that we will experience expanding short-covering activities into the end of the month. Outside markets, while finishing weak last week, may see limited follow-through selling activity and could easily return to a more supportive role as the week evolves. The healthcare legislation will be passed and it won't surprise me to see that stoke inflation fears again.                           

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.