Post-report Reactions, 6-30-09

The corn data is a complete shocker. To offer perspective, the acreage figure is roughly 4 mil higher than many believed would be possible. This represents 600 mil bushels! This is more than half of pre-report expectations of new-crop carryout! Without a weather problem, traders will be seeking to redefine "big picture" downside potential.

Soybean data was supportive, but corn was so bearish that traders will be looking/hoping to sell soybeans on any strength, which may well mean no strength occurs.

Wheat will remain a follower.

Also, today's USDA data does much to rattle any speculator confidence in commodity inflation, which threatens to unleash long liquidation from another more "big picture" market participant.

Producers, especially those holding old-crop inventory, will be under intense pressure to make sales.

Today's report was a real killer and will likely keep prices under pressure into the July 4th holiday weekend. After that, we will need a weather concern to produce any meaningful upside potential.

USDA Report Data, 6-30-09

*At 7:30 USDA released the following Acreage and Stocks data:
Quarterly Stocks:
Corn= 4.266, vs estimates of 4.19 bil avg, range= 4.064-4.321, 2008= 4.028
Soybeans= 597 mil, vs estimates of 566 mil avg, range= 559-620, 2008= 676
Wheat= 667 mil, vs estimates of 670 mil avg, range= 640-687, 2008= 306

Acreage:
Corn= 87.035 mil vs estimates of 84.158 avg, range= 82.474-86.00, March= 84.986, 2008= 85.982
Soybeans= 77.483 mil, vs estimates of 78.305 avg, range= 75.3-79.631, March= 76.024, 2008= 75.718
Spring Wheat= 13.772 mil, vs estimates of 13.102 avg, range= 12.826-13.404, March= 13.304, 2008= 14.135
All Wheat= 59.775 mil, vs estimates of 58.337 avg, range= 57.6-58.8, March= 58.638, 2008= 63.147

Sunday Night Grain Outlook, 6-28-09

Sunday Night Grain Outlook
By Duane Lowry
Sunday, June 28, 2009

OPENING CALL:
Corn= mixed,     Wheat= mixed,     Soybeans= mixed.

Weather will find cooler temperature trends evolving during the next two weeks. Acreage with dryness concerns in the Delta is increasing, but some point to hope of improved moisture in today's 6-10 day outlook. Key areas will experience net drying during the next two weeks, but the lack of a temperature threat will minimize any concerns. Due to the lack of heat it is difficult to label today's forecast bullish. However, the lack of precip makes it easy to understand how any shifting of the ridge activity back into the Midwest could create a sudden shift in focus and concern levels.    

News> USDA reports, Tuesday morning.

Wheat will be mixed on pre-report positioning amid lack of trade enthusiasm because of benign row-crop weather. Technical conditions are oversold and may be prone to short-covering activity IF corn and soybeans could manage to shrug off bearish weather spin.                

Corn will lean mixed/easier on cool temperature expectations and overall market sentiment. Limited precip expectations in key areas during the next two weeks and overall fear/uncertainty towards Tuesday's USDA data may be enough to slow new short positioning. Technical conditions are oversold and seem primed to short-covering activity before Tuesday morning, or quite susceptible to "buy the fact" trade mentality after any initial knee-jerk bearish report reaction. Consequently, current shorts may question the risk/reward of holding short positions into the report.  

Soybeans will continue to find very nervous positioning activity into Tuesday's reports. Trader expectations remain wide-ranging. Weather spin will be mixed, as Delta dryness area is expanding, but some hope for improvement exists during the 6-10 day window. Technical indicators offer mixed expectations.                           

In summary, while the cooling temperature theme will probably cast a bearish spin to weather, it would seem that embrace of such a position is not without vulnerability. Dryness/stress concerns should be expanding in the Delta and today's optimism for improved Delta moisture during the 6-10 day window should be reminded that recent moisture expectations for the region have failed to materialize. Technical conditions seem quite oversold. Longs have been exiting for several days, making it difficult to believe there are a lot of nervous longs left to seek the exit door before Tuesday's reports. It seems more reasonable to believe that shorts seeking to neutralize positions before the report should outnumber the longs still planning to exit before Tuesday.               

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.

Sunday Night Grain Outlook, 6-21-09

Sunday Night Grain Outlook
By Duane Lowry
Sunday, June 21, 2009

OPENING CALL:
Corn= 2-3 higher,     Wheat= 1-3 higher,     Soybeans= 4-6 higher.

Weather continued to push very hot temps on the Delta, parts of the southern Midwest and Plains region during the weekend. Many of these areas will continue to experience extreme heat this week with limited precip. Northern Arkansas will experience 100 degree temps all week. St. Louis will be 94-98 all week with limited moisture potential. Minimal precip totals will occur south of I-80. So while some Midwest acres will continue to benefit from favorable combinations of temperature and precip, we do have some areas of concern developing. China will face hot & dry conditions this week, but concerns will initially be limited because of last week's moisture. India's monsoon concerns may be increasing with today's weather outlook. I don't think too many traders will look at weather and decide now is a good time to initiate new short positions, especially in light of how much "what if" price premium has been removed during the past several days.   

News> Nigerian militants attack three Shell oil facilities. Protests in Tehran become violent.

Wheat will start higher on ideas Friday's late weakness was overdone and influenced by last second forced liquidation pressure from margin issues resulting from the sharp grain price declines of the past several days. Wheat harvest weather is favorable in the US hrw region. Technical conditions do not appear conducive to building or sustaining downward momentum at this time. Wheat is due for a notable corrective rally event, probably firming into the June 30th USDA reports.                

Corn will start higher on ideas Friday's late session weakness was overdone and influenced by forced liquidation pressures before the weekend. Margin call selling pressures should have culminated with Friday's close. Weather remains favorable for much of the Midwest, but extreme heat in the Plains, the Delta and parts of the southern Midwest and its expected duration seem too troubling to ignore. While Friday's closing markets might mask Informa's acreage data, the truth is that we need exceptionally good national yields in 2009 to avoid a very tight situation. Even more striking is the apparent need for significantly more corn acres in 2010. We have a bullish foundation to the corn market, the question is timing. For me, we have had enough of a sell-off, created enough of an oversold technical profile and liquidated much of the top-heavy price length that had developed during early June. Corn should have limited downside potential at this time from current levels. Upside potential will be determined by weather and final acreage data. We seem to have many conditions that would warrant a short-covering rally event into the June 30th USDA reports. 

Soybeans will find mixed sentiment. Weather spin will be mixed, depending upon where you wish to focus. Friday's price action was weak and many will say charts are poised for the next down leg to unfold. I agree with some bigger picture, longer-term downside potential, but we may still be a few weeks away from unleashing that scenario.                           

In summary, expect to find mixed expectations tonight. Focus on the northern half of the Midwest will result in generally favorable/non-threatening conditions. Focus on the southern Midwest, Delta and Plains will find increasing concerns and crop stress throughout much of the next two weeks. Any weakness tonight should lack the ability to build downside momentum or be sustained. The job of this recent price slide was to liquidate the top-heavy length that had been established during late May and early June. This has been accomplished. We have legitimate foundational fundamental support and we absolutely need very favorable national yields in 2009. With the temperature profile in the southern half of the US and the approaching June 30th USDA data, it appears to me that the market has removed too much "what if" price premium. I expect price recovery this week, possibly by a significant amount.              

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.

Sunday Night Grain Outlook, 6-14-09

Sunday Night Grain Outlook
By Duane Lowry
Sunday, June 14, 2009

OPENING CALL:
Corn= 3-5 lower,     Wheat= 2-4 lower,     Soybeans= 6=8 lower.

Weather produced showers favoring the western Midwest and northern Delta during the weekend. The next 5 days will produce near general coverage of 1/2-1 1/2, locally 3 inch rains in the Midwest. The overall Midwest forecast has a warming temperature theme, but any extreme heat will remain west of the Midwest. Moisture in the 6-15 day window will be rather limited, but with favorable soil moisture profiles, the drying conditions and warming temps will be excellent for the young plants. US row crops should flourish during the next two weeks if the current forecast verifies. Spring wheat areas will receive 85% coverage this week with beneficial moisture. Winter wheat harvest will be aided by warm and dry conditions. China received beneficial moisture during the weekend, with another major storm event seen late this week/next weekend. Western Australia has also found a needed/beneficial rain event in their forecast. Weather will receive a bearish spin.   

News>

Wheat will start lower in sympathy with weather-inspired weakness in the row-crops. New news is limited. Seasonal/harvest pressures will continue to weigh on wheat futures, which by many fundamental standards may still be overvalued. It remains difficult to find any sector of the trade that is willing to consider sponsorship of an ownership program at this time.                

Corn will start lower on favorable/non-threatening weather theme seen through the next two weeks. (See weather comments above.) Friday's price decline has longs on their heels and additional liquidation pressures seem likely. The spec community has been very top-heavy with their positions and we are in the time of year where liquidation activity can be very quick and very severe. Downside potential during the next 3 weeks remains very significant and the trade may be guilty of being caught completely off guard.

Soybeans will start lower on the lack of a weather concern amid faltering technical conditions that could spur sizeable liquidation activity during the next several days.                          

In summary, weather is too favorable/non-threatening on the vast majority of acreage and global weather also appears favorable/non-threatening/improved. Friday's price action has the longs on the defensive and this is the time of year where "trapped longs" without a weather story can produce severe liquidation pressures.