by Duane Lowry
Monday, September 24, 2012
SUNRISE OUTLOOK OVERVIEW:
*At 6:51 am> Grain/Soy Snapshots: Corn= 1 1/4 lower, Wheat= 4 1/2 lower, Soybeans= 15 3/4 lower.
Day Session Expectations vs Night Session Tone:
Dec Corn: Support= $7.30, Resistance= $7.55
Nov Soybeans: Support= $15.80-85, Resistance= $16.15
Dec Wheat: Support= $8.70, Resistance= $9.00
*Selling interest increasing from multiple sectors of the trade. Looks like we will have another down leg develop.
Outside Market Influences:
At 6:48 am> Price Snapshots: Crude was down $1.03, Gold was down $15.20, Dow Index was down 45 and the US $ was up 27.
*Expected trend changes beginning to show.
Weather will allow the US Midwest harvest to proceed well during the next two weeks in many areas, with moisture events favoring the southern Midwest. The southern Plains have moisture opportunities later this week.
Wheat traded both sides overnight and has mixed technical signals. News is limited. Inter-market spreads are back at levels that could trigger selling interest in wheat. We have experienced corrective bounce efforts for the past three days and prices are at key resistance levels. I don't know what we should be expecting wheat price trends to do during the next 2-3 weeks. I can imagine a scenario that pushes values into another down leg below last week's lows and I can imagine a scenario that creates more short-covering activity. If row-crops happen to utilize more time to define a bottom, such as say 2-4 more weeks, which leads to probes below last week's lows, wheat's gains during the past three days will probably be erased.
Corn has declined much more during the last several weeks than most expected. The warnings of liquidation have been proven accurate. Now the question shifts to trying to determine when this process will have run its course. Last week saw prices fall hard, but also spend 4 days of last week consolidating and giving some hope and sign that maybe we could experience price recovery and possibly consider the break as having run its course. That scenario remains a possibility. However, a much deeper price decline also remains a possibility that warrants respect. Producer yield reports are wide-ranging, not only across the entirety of the Midwest, but also across sections in each county. Considering the universal rhetoric that seemed to race each other to the lowest possibly yield projection, these country yield reports lead me to believe that national yields will ultimately compute at levels above early harvest expectations. On the other hand, so what? The amount of demand rationing that is required this marketing year will be huge, regardless of where the exact final yield is set. Liquidation was much more aggressive last week, but we certainly haven't completely cleansed the market of old longs and thus you must respect the potential for more selling pressures. Short-term technical conditions provided hope for stabilization and recovery last week, but that is exactly what happened during the past four days and prices are only 9 1/4 cents off the low of the current price decline. Selling interest is likely to still build above the market and limit ability to develop upside follow-through momentum to short-term 1-2 day gains. I am concerned that we are still in the grips of a liquidation process that may not have yet fully ran its course.
Soybeans suffered notable losses overnight, suggesting we have not spent enough time in this liquidation phase. News is limited. Downside risk during the next few weeks may be a test of the $15.50 area?
In summary, new news is limited. Liquidation pressures continue.
Barge Values: September= +59 Z
CZ: Support= 7.30, Resistance= 7.60-65
**PROFILE: Dec Corn> Mixed signals. Risk remains that the liquidation process is not fully mature. We may have more time to spend with this backdrop, setting the stage for a test of long-term support in the $7.00-15 zone.
Barge Values: September= +73 X
SX: Support= 15.50-70, Resistance= 16.20-35
SMZ: Support= 465-70, Resistance= 500-05
BOZ: Support= 52.00, Resistance= 55.00
**PROFILE: Nov Soybeans> Mixed signals. IN SUMMARY, we may still have more time to spend absorbing liquidation pressures.
Barge SRW Values: September= +48 Z
WZ: Support= 8.50, Resistance= 9.00
**PROFILE: Chicago December Wheat> Mixed signals. Inter-market spreads warn of another downside push in wheat.
GLOBAL HIGHLIGHTS & HEADLINES:.
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