Sunday Night Grain Outlook, 7-25-10
Sunday Night Grain Outlook
By Duane Lowry
Sunday, July 25, 2010
OPENING CALL:
Corn= mixed, Wheat= mixed, Soybeans= mixed.
Weather provided beneficial rains to parts of the eastern Midwest, with more beneficial rains seen this week. The Delta will also see widespread favorable rains this week. Parts of the western Midwest experienced excessive rains that caused flash flooding. Some spots will experience brief periods of excessive heat, but the overall temperature outlook during the next two weeks should pose little threat to national yield potential. Weather will find mixed spins, with some focusing on expected improvement in parts of the eastern Midwest and Delta, while others will attempt to draw focus to areas that experienced excessive weekend rains and the overall wetter-than-normal June and July and possible negative implications to yield.
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Wheat will find mixed expectations, after Friday's emotional bullish focus on Russian weather/production concerns failed to produce upside price energy. Short-term technical conditions are vulnerable, but few seem willing to trade this market from the short side. While looking for a very significant top to form soon, I am suspicious this market has desires to probe above recent highs. Consequently, any early week weakness, if it occurs, could prove to be a bear trap as the week evolves. Expect bullish fodder related to Russian crop problems to continue surfacing early this week.
Corn will find mixed expectations. Some will see weekend rains and the two-week outlook as being bearish. Others will point to excessive moisture problems, both weekend flooding and possible negative implications from an overall excessive moisture pattern in some areas for much of the past two months. Bulls have tried multiple storylines during the past several days to cheerlead a cause for higher prices, but as of Friday's close we are more than 25 cents off the recent highs and many of the past several days have produced disappointing performances in relationship to bulls' expectations. In fact, Friday was the lowest close since July 6th, trapping many emotional buyers with losing positions. Overall, I would label weather as bearish, but I understand that it is not unreasonable to point to bullish aspects related to excessive moisture. While we seem vulnerable to weakness, I don't think there are many that want to sell this market at this time and I wonder if the bulls won't make another attempt to prop up prices this week. Consequently, early weakness tonight may prove to be a bear trap? That said, I think there is very legitimate merit in viewing price strength this week into the $3.95-4.00 area as a legitimate selling opportunity.
Soybeans will face the same mixed weather interpretations. This market does have some shorts involved and recent price action has been reluctant to break. Any early week weakness may be an opportunity to trap bears. While I am looking for a major top in this time/price zone, I am suspicious the trade will attempt an upside probe above recent highs and chase shorts before prices ultimately head to lower levels, possibly significantly lower levels.
In summary, expect mixed and uncertain pre-opening rhetoric. Bulls and bears both have weather arguments, with the bulls the most vocal. Short-term technical indicators offer mixed signals. Longer-term indicators warn of potential for significant tops to be made in the very near future, if they have not yet been established. Yet, I am suspicious the bulls will appear to have the upper hand early this week and it wouldn't surprise me if early week weakness, if it occurs, could prove to be a bear trap. Look for selling opportunities on strength this week, but I don't think selling early week weakness seems very attractive.
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.
