by Duane Lowry
Thursday, July 12, 2012
SUNRISE OUTLOOK OVERVIEW:
*At 6:48 am> Grain/Soy Snapshots: Corn= 12 higher, Wheat= 7 higher, Soybeans= 2 1/2 lower.
Day Session Expectations vs Night Session Tone:
Dec Corn: Support= $6.90, Resistance= $7.35-45
*Vulnerable to liquidation pressures expanding.
Nov Soybeans: Support= $15.00 area, Resistance= $15.60-80
*Vulnerable to liquidation pressures.
Sep Wheat: Support= $8.10, Resistance= $8.35-50
*Selling interest should build at overnight values.
Outside Market Influences:
At 6:47 am> Price Snapshots: Crude was down $1.16, Gold was down $12.30, Dow Index was down 84 and the US $ was up 20.
Weather is similar to yesterday. Midwest precip opportunities improve by the middle of next week. This morning's forecast does have some wetter elements for this weekend in the west, but confidence is low.
Wheat is higher in sympathy with corn. News is limited. Technical conditions suggest vulnerability to additional weakness below yesterday's lows. Fundamental support is solely tied to corn.
Corn is higher on corrective buying amid hopes that yesterday's decline will be unable to find follow-through. Fundamental-based traders are exceedingly bullish, with some even talking $10 futures and racing each other to the lowest possible yield scenario. Yet, the market broke 60 cents from yesterday's post-report initial reactions. Expect support and buying interest to build around yesterday's lows, but it is not unreasonable to believe we have potential to revisit that area during the next several days. Yesterday's price action trapped many longs above the market.
Soybeans seem to be finding longs a bit more uncomfortable after yesterday's dramatic decline from initial bullish reactions. Technical conditions warn we can develop downside follow-through here. Fundamental focus is mixed. Some see reduced yields and difficulty achieving needed demand rationing. Others fear soybean yield potential can recover on many acres if rains improve. The trade is carrying a very large pool of speculative longs and yesterday's price action is a major threat and could develop follow-through liquidation pressures. Key support is 50 cents to $1 below current values and that has existing longs nervous/respectful.
In summary, trade reactions to yesterday's reports and price reaction varies, but most do not have respect for downside risk. If the market can't very quickly develop upside momentum to the firmer overnight recoveries in wheat and corn, expect liquidation selling pressures to build as the session unfolds. We have potential for short-term weakness that tests/probes yesterday's lows. Expect wide-ranging trade during the next few weeks that may also include a test/probe of yesterday's highs. However, recognize that this week's prices are more than high enough to create demand rationing. Recognize that yesterday's price action was a statement about how mature the market is in regards to discounting current known/perceived fundamental factors.
Barge Values: June= +69 N
CZ: Support= 6.75-95, Resistance= 7.45-65
**PROFILE: Dec Corn> Expect support and buying interest to build around yesterday's lows.
Barge Values: June= +65 N
SX: Support= 14.75, Resistance= 15.60-80
SMZ: Support= 420-25, Resistance= 455-60
BOZ: Support= 52.50, Resistance= 55.50
**PROFILE: Nov Soybeans> IN SUMMARY, additional corrective weakness is very possible.
Barge SRW Values: June= +28 N
WU: Support= 7.75, Resistance= 8.30-50
**PROFILE: Chicago September Wheat> Topping activity. Overbot conditions. Long-term resistance. Current levels offer longer-term selling opportunities for speculators and hedgers.
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.