Focus Remains on Isaac, Bernanke and Russia

August 30, 2012 01:39 AM

What Traders are Talking About:

* Hot and dry now; rains, wind on the way. Many areas of the Corn Belt could see record high temps today as the country's midsection bakes under a high pressure ridge. Hot temps will further stress already highly stressed crops. But rains and high winds associated with Isaac are on the way as the system moves north out of the Gulf. Ironically, there is more concern with the rains and wind than the heat, especially for the corn crop. Poor stalk quality leaves the corn crop vulnerable to lodging and potential yield loss if there are damaging winds and rains.

The long and short of it: Traders have small crops already factored into the market, but additional late-season damage could trigger another wave of buying, especially in the soybean market as there have been no signs of demand destruction.

* Odds of QE3 mention declining? After some upbeat economic data Wednesday, odds Fed Chairman Ben Bernanke will unveil a new round of economic stimulus in his Friday address at Jackson Hole, Wyoming, have declined. Many investors are still expecting the Fed to enact a third round of quantitative easing (QE3) soon, but there are also many who feel the Fed will avoid any action ahead of the Nov. 6 elections. With opinions split, one of the sides is going to be disappointed by Bernanke's comments.

The long and short of it: Impacts from Bernanke's Jackson Hole speech are likely to be wide-ranging, as traders of currencies, equities, bonds and commodities will be dissecting every word very closely.

* Russia continues to shoot down grain export curb talk. One day ahead of a meeting of Russian officials on the grain situation, the country's deputy ag minister says there's no need to curb grain exports at this time despite falling production estimates due to drought. Meanwhile, private consulting firm SovEcon cut its total grain and wheat production forecasts to 70.5 MMT and 38 MMT, respectively. The firm says total grain production could fall below 70 MMT if corn yields disappoint.

The long and short of it: The comments from the deputy ag minister seemingly signal Russia is not ready to limit exports at this time, but Russian officials aren't always on the same page.


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