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South American Weather, Upcoming Report Drive Markets

January 6, 2012

This information is provided by Archer Financial Services, Inc., 800-933-3996.

 

The week certainly started with a "bang" in the grain markets following a second consecutive holiday weekend, as the non-commercial fund long position in corn jumped over 45,000 contracts through Tuesday’s close.  
 
There was little doubt that there would be a volatile open on Tuesday. The only question was which direction that it would be. 
 
The weather in Argentina and Southern Brazil continued to be a concern to crops grown in that area of the world, but some of those fears diminished as the week went along. Hot weather and lack of rain allowed corn to start the week .16 higher and advance nearly .20 higher, but mid-day forecasts on Thursday provided a forecast of "drought busting" rains for next week. 
 
This lead to a late week sell off that saw corn end the week 3-11 cents lower and soybeans close 11-13 lower for the week. There is some question between the two major weather models as to how much precipitation will fall early next week. 
 
The start to next week will feature an addition or subtraction of weather premium in prices, before giving way to the very important USDA Report on Thursday. The last five January reports created limit moves on the corn market with 3 of those being limit up, while the other 2 were limit down. 
 
Although next Thursday’s report may likely provide yet another limit move, it will most certainly set the tone for the trade for the next 30-45 days. 
 
There are a lot of tools available for producers to lock in some protection at these levels. It is important for producers to review their hedged position and make any adjustments that they need using these tools before the close on Wednesday.

 

 

(click the charts below to enlarge)

 MarketMovement1 6 11

 

Weekly Prices 1 6 11

 

COT 1 6 11

 

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