Grains Continue Focus on South American Weather
Jan 03, 2012
· No overnight trade due to New Year’s Holiday; Outside markets are mostly supportive this morning with US$ lower and crude/equities sharply higher; SAM weather issues still an overall bullish input, however trade will watch forecasts of rain for early next week
· Rain needed in RGDS Brazil soy/corn areas, rainfall chances continue to disappoint; Temps have not been as hot as expected; Hot/dry weather persists in S. Argentina crop areas, however some forecasters are calling for a rain system early next week
· Brazil exported .814mmt of corn in Dec, down from .908/Nov and well below a last year’s number of 1.93mmt; Soybean exports at 1.47mmt vs 1.75/Nov and only .292mmt in 2010
· COT showed managed money increased long in corn by 22k to 149k, Increased long in beans by 21k to 23k; Cut short in wheat by 13k to 29k
· USDA to release Jan Crop Production on the 12th; Pre-report estimates coming next week
Traders are unsure of how to call the markets this morning, however most agree that weather issues in S. American maintain a bullish tone. Still, just as with US weather issues, the market is looking 6-10 days out. There are some rains forecasted for Argentina crop areas early next week. North Brazil is in good shape while S. Brazil areas of RGDS and Parana have some issues. Technically speaking, the grain markets maintain a bullish bias, however corn/soy/wheat are all now officially overbought as far as the charts are concerned. SAM weather issues should trump outside market action this week.
Producers: Use this rally to extend old-crop sales on corn and soybeans. We’re not advising any sales for the 2012 crop at this time. Keep an eye open for a new marketing newsletter from Straits that will begin with the ’12 corn and soybean crops.
As always, call the office with questions or concerns.