Up Overnight on China GDP, South American Weather
Jan 17, 2012
· Grains rebounding overnight after last week’s USDA-induced collapse; Gov’t raising corn production slightly while leaving demand mostly unchanged, a shock to bulls who were looking for lower carryout numbers
· Soybean carryout growing by 45mil/bu from the Dec report; Production up with demand slightly lower; World carryout numbers bearish across the board
· China’s GDP at 8.9% vs. estimates of 8.6%; Outsides higher with US$ sharply lower as a result
· No major changes to S. American weather outlook over the weekend; Best chances for new rains early next week; Reports conflicted on extent of crop damage
· Corn harvest has begun in the northern areas of Brazilian states Parana and RGDS, outlook negative due to drought issues
· Today’s NOPA Crush seen at 140.7mil/bu compared to 141.3 in No; Report released at 7:30am CST
Last week’s market action had to have flushed out the bulls in the grain market. Last week’s report was not necessarily bullish; We would describe it as being neutral, but bearish relative to market expectations. The government simply didn’t make enough changes to convince us which way our S&Ds are headed. We look for a choppy trade this week, which may be heavily dependent action in the currency markets. Next topic up for discussion: 2012 Acreage Allocation.
Producers: If you’re not worried about the prospects for 2012 grain prices, you should be. There is tremendous downside risk in the corn market especially IF producers were to planted 94-95 million acres or more. Call the office for specifics.
Note: Check out our "Upcoming Events" page! We’d love to see you out at any of the Straits events!
As always, call the office with questions or concerns.
Regards,
Joe Vaclavik
(312) 462-4438
