Down Overnight with US$ Rally
Dec 12, 2011
· Grains trading lower this morning in sympathy with sharply higher US$ and lower outside commodities; Soybeans trading back near Friday’s report-day lows
· Friday’s USDA report was generally negative; Soybean taking the biggest hit, testing multi-month lows; Large China production estimate causing shakeup in the world carryout number for corn
· Chinese data showing 5.7mmt of soybeans imported in Nov, up 50% from Oct and up 4% from last year
· Commitment of Traders report released on Friday; Funds dropped 15k from their long corn, added 3k to their short soybean position and covered 5k of their shorts in wheat
· China sees soybean imports rising to 5.4mmt in Dec, forecasting total 2011 soy imports at 52.6mmt
· Some South American weather forecasts looking drier now, a confirmation may be the bean market’s best chance to rally
· Ratings agency and traders alike were unimpressed with Friday’s EU summit causing week euro currency action today
Friday’s report did little to help reverse the downtrend in the grain markets. World numbers were especially bearish while US numbers were more of a non-event for corn especially. A South American weather issue would be the best case scenario for bulls at this point. Funds continue to add to shorts and liquidate long positions. Many fearing that recent outflow of fund money is a result of MF Global disaster and concerns over customer safety. This is not the time to jump in and short the market, but is a time exercise extreme caution on unsold cash grain especially.
Straits Financial does futures/options brokerage for farms, feedlots, elevators and processors. Call Joe Vaclavik at (312) 462-4438 for more information.