by Duane Lowry
Monday, October 8, 2012
SUNRISE OUTLOOK OVERVIEW:
*At 5:05 am> Grain/Soy Snapshots: Corn= 6 1/2 lower, Wheat= 1 3/4 higher, Soybeans= 11 lower.
Day Session Expectations vs Night Session Tone:
Dec Corn: Support= $7.30-35, Resistance= $7.45-48
*Post-stocks report buyers are disappointed and we may have a heavy tone into the USDA reports on Thursday.
Nov Soybeans: Support= $15.10-20, Resistance= $15.50
*Poised for a test/probe of recent lows during the next several days. Probably a heavy tone with minimal intraday bounce energy.
Dec Wheat: Support= $8.30-35, Resistance= $8.60-65
*Vulnerable to probing recent lows during the next several days.
Outside Market Influences:
At 5:04 am> Price Snapshots: Crude was down $1.07, Gold was down $8.50, Dow Index was down 49 and the US $ was up 26.
*The US Dollar is positioning for a notable upside push in the weeks/months ahead.
Weather continues to provide favorable US harvest conditions for rapid harvest progress this week. Some increased moisture patterns will develop during the 6-15 day period. The US Plains hrw wheat region will see some improved moisture beginning later this week and extending into the 6-15 day window, but possibly still leaving the drier northwestern region with less than desired moisture. Northern Brazil is expected to see improving moisture during the next couple of weeks. Australia will see some areas improve moisture conditions this week, with remaining areas seeing improvement next week.
Wheat will find mixed spins. Some will focus on dryness concerns in parts of the US hrw wheat region and Western Australia, while others will focus on moisture improvements in eastern Australia and parts of the Plains. Recent price action hasn't been clearly tied to weather developments and if anything probably has underperformed weather bulls' expectations. Short-term technical conditions warn of more downside risk and selling interest likely to build on any minor bounce attempts from Friday's weak settlement. Charts appear vulnerable to sliding below recent lows. Also, row-crops may have more downside desires here and a willingness to spend more time in search of the seasonal bottoms than some would prefer. Thus, we need to be respectful of additional downside risk here in wheat during the next 2-3 weeks.
Corn was weak overnight. We have added some new longs during the past week and price action has underperformed popular expectations, setting the stage for liquidation activity. It still remains likely that recent lows have defined the bottom side of the price zone likely to create the seasonal bottom, but it is not outside the realm of possibility to retest or even jab that low. Traders seem to have come to a common acceptance that US soybean production ideas are on the rise, but there is no such confident consensus towards US corn yields. Yield expectations remain wide-ranging, but convictions seem rather shallow from both bulls and bears. To me, that makes us more vulnerable to bearish reactions to Thursday's USDA reports. Technical conditions are mixed. Last week's performance was too anemic. We may be more vulnerable to a test of recent lows than most are willing to consider. This week's USDA report will determine whether we test/probe the recent lows. However, under virtually any imaginable US national yield scenario, US corn prices won't have a material sustained fall below the September lows. Any test/probe of that area will need to be searched for longer-term buying opportunities.
Soybeans have limited news. Improving moisture prospects for northern Brazil will dash bulls' hopes for a quick start to a South American weather storyline. Traders are bracing for bearish soybean data from USDA Thursday. Price action still warns of additional downside vulnerability. Yet, overall conditions suggest probes below recent lows should be expected to evolve into a major seasonal bottom and offer longer-term buying opportunities.
In summary, fundamental storylines don't seem bullish and some of the recent buyers may be disappointed with last week's price action. Technical conditions warn of additional downside risk. Outside markets cast a threatening tone to commodity investor sentiment. Positioning for the October USDA reports may be dominated by selling pressures. Tests/probes of recent lows need to be searched for longer-term buying opportunities, but such a statement implies downside risk from Friday's settlement of 15-35 cents in wheat, 25-50 cents in corn and 40-70 cents in soybeans. We are in search of seasonal bottoms. Recent lows are in the right zone, but still may be vulnerable to temporary probing of those levels.
Barge Values: October= +64 Z
CZ: Support= 7.35-40, Resistance= 7.50-55
**PROFILE: Dec Corn> Price action is suspect, despite layers of support. We may have more time to spend defining the seasonal bottom. Soybeans and wheat are both positioning for more price declines, so I suppose all the post-stocks report buying enthusiasm will end up being liquidated in some sort of test of recent lows.
Barge Values: October= +78 X
SX: Support= 14.90-15.10, Resistance= 15.60-65
SMZ: Support= 450-55, Resistance= 475
BOZ: Support= 49.50-50.00, Resistance= 53.00
**PROFILE: Nov Soybeans> We are likely in the final stages of defining the seasonal bottoms. This process can lead to a jab below the recent lows. IN SUMMARY, short-term indicators suggest we may have more time to finalize season bottoms and the next several days may lead to a test/probe of recent lows. However, such weakness should be seen as providing longer-term buying opportunities.
Barge SRW Values: October= +52 Z
WZ: Support= 8.40-45, Resistance= 9.00-9.10
**PROFILE: Chicago December Wheat> Mixed short-term signals, with a bias that recent lows will be probed. Such an event should not be embraced as trend-establishing move.
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.