by Duane Lowry
Monday, May 14, 2012
Corn= mixed/support developing, Wheat= lower/stabilizing/recovery, Soybeans= lower.
*At 6:13 am> Night session results: Corn= 2 3/4 lower July, unchanged Dec, Wheat= 3 1/2 lower, Soybeans= 28 lower July, 19 lower Nov.
Weather continues to offer ideal conditions for nearly all US regions. China received better than expected beneficial weekend moisture. There is nothing bullish about weather. That said, two weeks from now there will be some acres/regions that will want moisture to quickly form in their forecasts.
Wheat will lean lower on overnight weakness amid generally favorable Northern Hemisphere wheat production prospects. However, short-term technical conditions seem capable of building buying interest around last week's lows and limiting near-term downside energy. Inter-market spread activity may also provide support to wheat. Overall conditions still warn of potential for declining price trends in the weeks ahead, but it wouldn't be that difficult to experience 20-25 cent corrective price recovery event from current levels during the next several days. Expect limited ability to develop downside momentum to recent declines, leading to corrective price strength that will provide another longer-term selling opportunity.
Corn will feel the weight of ideal weather and trader disappointment after last week's price declines. Yet, short-term technical support could develop several cents below Friday's close and limit downside follow-through, setting the stage for recovery attempts as the week unfolds. While weather is currently ideal, someone is always willing to quickly imagine the beginning of the next drought. With little precip seen during the next two weeks for many acres, it won't take long before fears develop with the current forecast. This could be a week where we see some type of consolidation activity and recovery attempts. However, expect selling interest to build above the market from multiple sectors of the trade, limiting short-term upside probing potential to the $5.20-30 zone, basis Dec. Recent short-term sellers may find merit in viewing weakness today as an opportunity to take profits and step aside for a few days.
Soybeans will start lower on sharp overnight losses. Outside markets weighed on commodity sentiment, but this early week action may be completely reversed as the week unfolds. July soybeans have fallen 85 cents from the post-report strength on Thursday to the overnight low. Short-term technical conditions seem capable of producing stabilization and recovery from the area of the overnight lows during the next several days. Recent short-term sellers may choose to take profits here and wait for a better selling opportunity. Longer-term downside risk remains.
In summary, outside markets helped to put downward pressure on commodity markets, but I am suspicious the outside markets could reverse this direction as the week unfolds. Weather offers ideal opportunities for planting to complete and for early crop development during the next two weeks. However, it won't take long before some want to express fears of a new dry trend. Short-term technical conditions make it uncomfortable pressing the short side at current levels. Recent short-term sellers may want to take profits on weakness today and step aside for a few days. At 6:12 this morning: Crude was down $1.88, Gold was down $22.10, Dow Index was down 91 and the US $ was up 27.
Barge Values: May= +82 N
CN: Support= 5.65-70, Resistance= 6.00-10
CZ: Support= 5.01, Resistance= 5.10-15, 30
**PROFILE: July Corn> Support should develop around last week's lows. Dec Corn> Resistance in a price ceiling format will likely exist around $5.30. Increased selling interest will build in the $5.10-20 zone. Overall conditions suggest vulnerability to trending lower values in the weeks ahead. However, we may experience stabilizing/correcting action this week.
Barge Values: May= +52 N
SN: Support= 13.70-80, Resistance= 14.10-30
SX: Support= 12.95-13.05, Resistance= 13.30-40
SMN: Support= 390-400, Resistance= 415-20
BON: Support= 51.00, Resistance= 54.00
**PROFILE: July Soybeans> Overnight values are 85 cents off the post-report reaction highs made just last Thursday. Expect some recovery as the week unfolds. Nov Soybeans> Longer-term downside risk remains, but we can recover from the sharp overnight declines as the week unfolds. IN SUMMARY, short-term bears may seek to take profits and step aside for a few days.
Barge SRW Values: May= +53 N
WN: Support= 5.90-93, Resistance= 6.20-30
**PROFILE: Chicago July Wheat> Short-term recovery potential above $6.25 will be limited, but wheat could experience some short-covering energy from current levels. Overall conditions warn of declining price trends in the weeks ahead.
GLOBAL HIGHLIGHTS & HEADLINES: The People's Bank of China is cutting its reserve ratio requirement for banks by 50 basis points, beginning May 18. This is a stimulus measure. Greece has not been able to reach agreement on a new coalition government after recent elections, increasingly appearing to be headed down a path for new elections in June. The international community is troubled by what appears to be growing clout for those that seek to reject previous bailout deals.
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.