European Summit Fails To Impress

December 12, 2011 12:11 AM

What Traders are Talking About:

* EU Summit fails to quell investor concerns. European leaders agreed last Friday to a new fiscal plan, but investors aren't convinced the measure will be enough to ease the debt crisis. As a result, commodities and global stock markets were lower while the U.S. dollar index was firmer in a risk-off move. Credit rating agency S&P says it will revisit its ratings on European nations in the coming days and Moody's says it will reassess European credit ratings in the first quarter of next year. Neither were impressed with results of the European summit.

The long and short of it: European debt concerns are back in the spotlight after some mild hope late last week.

* USDA delivers another bearish report. Grain and soy traders are still digesting last Friday's Supply & Demand Report, which was expected to be a relative yawner. USDA unexpectedly raised corn carryover from last month and pushed soybean and wheat ending stocks projections higher than anticipated. The most damaging figure from a long-term outlook perspective was 2011-12 soybean ending stocks, which are now projected to be higher than 2010-11.

The long and short of it: The hits keep coming to market bulls, whether in the form of market fundamentals or macro-economics.

* South American weather update -- cooler; rain chances in Brazil. Some relief from recent heat and dryness was seen in areas of Argentina and Brazil over the weekend, although rains mostly missed key corn and soybean production regions. Cooler temps are in the forecast for this week with potential scattered rains, most likely through southern Brazil, as the colder air pushes through. Once this week's cooler temps and scattered rains pass, forecasters are expecting a return of hot, dry conditions.

The long and short of it: Concern with South American crops is limited for now, as the growing season is off to a favorable start. But traders will more closely watch weather from here forward with La Nina conditions persisting.


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