Early Grain Outlook, 5-3-12

Effective Date: 5/3/2012

by Duane Lowry
Thursday, May 3, 2012

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

*At 7:05 am> Night session results: Corn= 1 3/4 higher July, 3/4 lower Dec,     Wheat= 4 3/4 higher,     Soybeans= 2 1/4 lower July, 3 1/4 lower Nov.

*Export Sales data will be released at 7:30 this morning. Here are the trade estimates: Wheat= 550-850 tmt, Corn= 2600-3300 tmt, Soybeans= 900-1400 tmt, Soymeal= 100-300 tmt, Soyoil= 0-10 tmt.

Weather offers a cooler theme during the 6-15 day window. The Delta and Southeast sees moisture improvement during the 6-15 day period. US Midwest planting should resume in earnest later next week, with most areas able to complete most planting activity by May 15-20.                

Wheat will attempt to stabilize/correct after yesterday's sharp losses. Yesterday was the lowest settlement in July futures since early in the life of this contract, going back to September 2009. For nearly a year, every rally effort has indeed been a selling opportunity. New news is limited. Fundamental backdrops remain bearish and seem capable of keeping prices on the defensive into the Northern Hemisphere wheat harvest. Short-term technical conditions will encourage selling interest to build around $6.30, limiting corrective potential of yesterday's slide. Downside risk is still notable.                           

Corn has little for new news. Traders are shocked and disappointed with yesterday's decline, but still largely unwilling to consider trading this market from the short side. Technical selling interest will build above the market. New-crop futures are within several cents of recent lows, despite all the Chinese demand rhetoric and trader unwillingness to consider bearish stances. US Midwest planting activity will remain slow during the next several days, but a good window appears to open that will allow most all planting activity to be completed by May 15-20. Expect resistance to about a nickel above the overnight highs. Overall conditions remain poised for a more determined trending lower pattern to evolve during the next several weeks.                                                           

Soybeans will attempt to recovery part of yesterday's sharp losses. News is limited. Selling interest will build about a nickel above the overnight highs. Downside risks remains very significant.                                                 

In summary, traders are shocked at yesterday's weakness but not really willing to consider bearish approaches. Yet, technical selling will develop not too far above the overnight highs and limit the scope of any corrective bounce to yesterday's slide. Overall conditions point to declining price trends during the next several week. Short-term corrective bounce efforts should be searched for selling opportunities. At 7:04 this morning: Crude was down $0.23, Gold was down $8.30, Dow Index was up 23 and the US $ was up 16.

CORN:
Barge Values: May= +63 K
CN: Support= 5.85,   Resistance= 6.15-20
CZ: Support= 5.10,    Resistance= 5.35-40

**PROFILE: July Corn> Expect selling interest to build and limit any probes above $6.20. Downside risk is very significant. Dec Corn> We have begun what should prove to be a more determined declining price phase. Downside risk is very significant. Minor corrective strength towards $5.35 should be seen as a selling opportunity.                 

SOYBEANS:
Barge Values: May= +64 K
SN: Support= 14.25, Resistance= 14.90-95
SX: Support= 13.00, Resistance= 13.75-80
SMN: Support= 400, Resistance= 430-35
BON: Support= 54.00, Resistance= 56.00

**PROFILE: July Soybeans> We are poised for a significant down trend to evolve. Nov Soybeans> Upside potential is limited. Downside risk is very significant. IN SUMMARY, producers need to be aggressively protecting profit opportunities. What the soybean market has been experiencing is not much different than what corn experienced in August of last year. Corn declined roughly $2 per bushel at a time when production estimates continued to decline and trader sentiment was not at all expecting a break.        

WHEAT:
Barge SRW Values: May= +53 N
WN: Support= 6.05, Resistance= 6.25-30

**PROFILE: Chicago July Wheat> More downside potential exists. We remain poised for price erosion. Corrective activity towards $6.30 should be searched for selling opportunities.      

GLOBAL HIGHLIGHTS & HEADLINES:

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.