Sunday Night Grain Outlook, 8-15-10

Sunday Night Grain Outlook
By Duane Lowry
Sunday, August 15, 2010

OPENING CALL:
Corn= 1-3 lower,     Wheat= 3-5 lower,     Soybeans= 3-5 lower.

Weather provided better than expected coverage and precip totals for the Midwest and Delta during the weekend. The forecast remains generally favorable/non-threatening through the next two weeks for most areas. Russia's forecasts offer cooler temps and better precip opportunities for many areas.                       

News>.   

Wheat will start lower on follow-through to Friday's weak performance. Cooler and wetter forecast for much of Russia/FSU areas of concern will also weigh on trader sentiment. I doubt if it improves production potential, but it will help to scale-back fears related to fall planting possibilities. Technical conditions warn of downside vulnerability. Fundamental conditions warn current prices are still inflated with speculative activity and well above a more reasonable/warranted level given overall global wheat stocks.                                 

Corn will start lower on better than expected weekend precip and generally favorable/non-threatening US weather expectations for the vast majority of acres. Friday's Commitment-of-Traders data also showed the spec has bought more corn than expected, suggesting we may be much farther down the maturity road with this bull run than current rhetoric suggests. Technical conditions warn of notable downside vulnerability. A record harvest season is not too far away. Anecdotal reports from the country continue to suggest higher final production figures are possible. Many producers are facing tremendous profit opportunities at a time in the growing season when the crop is largely known. This is the definition of a good selling opportunity.              

Soybeans will start lower on ideas Friday's strength was exaggerated with short-chasing activity, along with expected weakness in corn and wheat. Better than expected rains should also weigh on values. Fundamental profiles are not bullish. Technical profiles warn of notable downside vulnerability. A record harvest is just ahead.                                 

In summary, post-report Johnny-come-lately buying activities should have culminated last week, along with short-chasing activity. Technical conditions warn of downside vulnerability. Expect approaching seasonal harvest factors to weigh on price trends, challenging recent buyers and likely building selling pressures in the weeks ahead. I write all this and expect a lower start tonight, but the trade is universally bullish and the tendency on Sunday night has been to be a reflection of trader sentiment. So, I certainly rule out some attempt to probe into positive territory, but any attempt at strength early this week, if it occurs, should be viewed with great skepticism.               

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.