by Duane Lowry
Friday, September 7, 2012
SUNRISE OUTLOOK OVERVIEW:
*At 6:50 am> Grain/Soy Snapshots: Corn= 1 1/2 higher, Wheat= 3 higher, Soybeans= 8 lower.
Day Session Expectations vs Night Session Tone:
Dec Corn: Support= $7.75, Resistance= $8.05, 18-22
*Selling interest building above the market. Some vulnerability.
Nov Soybeans: Support= $17.15, Resistance= $17.55-65
Dec Wheat: Support= $8.65, Resistance= $8.95-99
*Limited rally potential. Vulnerable.
Outside Market Influences:
At 6:45 am> Price Snapshots: Crude was up $0.57, Gold was down $8.10, Dow Index was up 42 and the US $ was down 22.
*Current gains likely to be rejected, as short-term euphoria over any ECB action is likely to give way to the overall economic problems in Europe and the reality that their action prevents a certain type of liquidity problem, but really does little to stimulate their economy at this time. Slow European economic activity will remain for quite a while and impact the global economy. The US Dollar should benefit in the months ahead and its knee-jerk bearish reaction to the ECB moves should be very short-lived.
Weather will provide widespread moisture during the next couple days, favoring the eastern and southern Midwest. The next two weeks will see additional moisture events, but overall conditions will allow harvest activity to expand.
Wheat has little for new news. Wheat benefited yesterday from inter-market spread unwinding, but with row-crops trying to show stabilization and focused on Informa's estimates this morning, wheat may not receive the same benefit. Technical resistance is building near/just above yesterday's highs. Expect limited rally potential above $9.00, basis Dec. Overall conditions remain conducive to further price erosion during the next few weeks.
Corn traders sighed relief with yesterday's reversal-up action and hope to see upside follow-through energy today. Overnight trade was on both sides, but has so far been unable to push above yesterday's high. Charts have been faltering and have a certain look of vulnerability. Trader sentiment has been and remains universally bullish, but nervousness levels have been climbing the past few days, as prices erode to some of the lowest settlement areas of the past several weeks. Traders hope Informa will deliver bullish production estimates this morning, but there may be a lack of confidence in how the markets will respond to more yield projections. Recent bullish yield prognostications haven't had much ability to generate new upside energy. Trade below yesterday's lows has the potential of expanding liquidation energy. Traders find it hard to believe we have experienced a weak tone in front of next week's USDA numbers, but they feel the impact on equity and will respect potential for further downside risks if we violate yesterday's lows.
Soybeans spent the entire overnight session in negative territory, probably quite a disappointment to many. Traders are hoping for some recovery today, but selling interest is likely to build on a probe above yesterday's high. Traders remain anxious for more harvest activity and a better handle on yields, which may begin to be found next week. Technical conditions should create resistance 10-15 cents above yesterday's settlement. Any bullish response to Informa may lack ability to build sustainable follow-through. Overall conditions warn of a very significant liquidation event ahead.
In summary, the trade is trying to balance the hope of price recovery against the respect/fear that price action has been underperforming expectations and leading to chart erosion in the trade's primary market of focus, corn. Short-term recovery attempts will struggle against a broader theme of vulnerability to advancing liquidation pressures in the weeks ahead.
Barge Values: September= +45 U
CZ: Support= 7.45-55, Resistance= 8.15-25
**PROFILE: Dec Corn> Reversal-up action. Resistance and selling interest will build above the market, limiting the sustainability of any upsurge potential.
Barge Values: September= +75 X
SX: Support= 16.65, Resistance= 17.55-70
SMZ: Support= 500, Resistance= 535-40
BOZ: Support= 54.00, Resistance= 58.00
**PROFILE: Nov Soybeans> Selling interest should build not too far above yesterday's highs, limiting the scope and extendibility of today's bounce potential. IN SUMMARY, we remain vulnerable to a very significant liquidation phase.
Barge SRW Values: September= +50 U
WZ: Support= 8.25, Resistance= 8.93-98
**PROFILE: Chicago December Wheat> Resistance should build near overnight values. Further price unraveling is likely during the next few weeks.
GLOBAL HIGHLIGHTS & HEADLINES: US jobs data will be released this morning. US data has been offering some improving signs, but all against a still nervous backdrop regarding employment. Any supportive jobs data likely lessens the chance of the Fed creating more stimulus measures at this time.
*Informa to release production estimates around 10:30 this morning.
*USDA Crop Report, September 12..
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.