Focus on South American Weather, Crude Oil Market

December 28, 2011 12:12 AM

What Traders are Talking About:

* South American weather update. Radar shows scattered light showers appear to be developing over western growing areas in Argentina this morning, but the forecast continues to call for hot, dry conditions through the heart of the growing region for at least the next seven to 10 days. The forecast indicates cooler temps, but very limited precip across southern Brazil, with heavier rain chances across central and east-central areas of the country. A note from a farmer/trader contact in Argentina yesterday indicated corn is really suffering and yield losses are mounting through the core production area.

The long and short of it: South American weather remains very much in focus. Corn is at greater risk, but the soybean market has been more price-responsive to this point.

* Oil traders watching Iran. Crude oil futures pushed above $100 Tuesday as Iran threatened to block all oil shipments through the Strait of Hormuz, which is a transport avenue for around 20% of the world's oil. But crude oil futures backed off a little overnight as traders booked profits amid the belief the threat from Iran is mostly rhetoric. Obama administration officials have indicated there is a contingency plan to keep the strait open in the event of a crisis.

The long and short of it: If geo-political tensions rise, it would be the type of situation that could drive heavy speculative buying in the crude oil market.And that would have an impact on grain trade.


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