by Duane Lowry
Friday, September 14, 2012
SUNRISE OUTLOOK OVERVIEW:
*At 5:01 am> Grain/Soy Snapshots: Corn= 8 1/2 higher, Wheat= 17 higher, Soybeans= 13 higher.
*Where are we for the WEEK? Dec Wheat= down 3 cents; Dec Corn= down 25 3/4 cents; Nov Soybeans= up 10 3/4 cents; Dec Soymeal= up $3.70; Dec Soyoil= up 35 points; Crude Oil= up $1.89; US $ Index= down 104; Gold= up $31.60; Dow Index= up 229.
Day Session Expectations vs Night Session Tone:
Dec Corn: Support= $7.62-65, Resistance= $7.85-90
*Selling interest to build above the market.
Nov Soybeans: Support= $17.05, Resistance= $17.60-70
*Strength has achieved areas that should build resistance.
Dec Wheat: Support= $8.75, Resistance= $9.00
*Short-cleansing, but nowhere to go.
Outside Market Influences:
At 4:59 am> Price Snapshots: Crude was up $1.80, Gold was up $4.60, Dow Index was up 53 and the US $ was down 25.
*We are poised for trend changes.
Weather provides limited harvest disruptions during the next two weeks.
Wheat traded sharply higher overnight, eclipsing recent highs. Since mid-July, Dec wheat has spent most of its time in a 50-cent trading range. During this time there have been 12 distinct swings that covered something near 50 cents, but unable to develop into a real trend move. I doubt if this upswing will either. Wheat/corn spreads are now 75 cents off their lows. Corn hasn't suddenly become bearish enough to no longer need wheat's efforts to displace US corn usage. Wheat hasn't suddenly found a compelling factor that warrants sustained independent strength trends. Thus, I see no reason to trust or embrace current strength to believe it holds potential for extending into a new up leg.
Corn was higher overnight and has entered the zone that should begin to see increased selling interest develop. This recovery should be enough to generate selling activity, but not enough to "save" the speculative longs that have accumulated during the past several weeks and have been trapped by recent weakness. However, trader sentiment is certainly such that every recovery is believed to be the beginning of the full recovery and the next upside leg. So, you have two choices here. 1) Believe that this week's lows that were 90 cents off the August peak was enough of a correction and has accomplished its mission of chasing the weak longs out. Or 2) Even with the overnight strength, prices are below all price action of the past six weeks and still has too many longs trapped above the market and we still have more time and price erosion to experience before the liquidation phase has completely run its course. The trade is clearly anxious to believe Choice 1, but Choice 2 is more likely.
Soybeans pushed higher overnight, now within 30 cents of the August highs. Trader sentiment is very bullish. Yet, the last few weeks' price action has the look of being a top. Traders have added inflation fears to their bullish fundamental argument after yesterday's Fed moves. Technical conditions are not conducive to this being a new up leg. Current levels offer selling opportunities. We remain vulnerable to a very significant liquidation phase during the next several weeks.
In summary, bullish excitement and hope is universal. Most believe the recent weakness in corn can't be sustained. Most believe soybeans are beginning a new up leg that will extend far above the August highs. Traders have found new reasons to be bullish in the Fed moves. Yet, we are still burdened with excessive spec length. Overall conditions warn short-term strength should not be trusted, despite trader enthusiasm.
Barge Values: September= +28 Z
CZ: Support= 7.35-50, Resistance= 7.80-95
**PROFILE: Dec Corn> Selling interest will build on short-term bounce into $7.80-95. Overall conditions point to price erosion this week's lows during the next few/several weeks.
Barge Values: September= +65 X
SX: Support= 16.65, Resistance= 17.50-65
SMZ: Support= 480, Resistance= 530-35
BOZ: Support= 54.00, Resistance= 57.50-58.00
**PROFILE: Nov Soybeans> Resistance should build at overnight levels. IN SUMMARY, overall conditions are not conducive to a new up leg unfolding sustainable momentum, but instead offer compelling warnings of a major liquidation break ahead. Short-term strength offers selling opportunities.
Barge SRW Values: September= +40 Z
WZ: Support= 8.90, Resistance= 9.30
**PROFILE: Chicago December Wheat> Overnight values pushed to the highest levels seen since August 23.
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.