German, France Aid Plan Boost Risk Appetite

October 10, 2011 01:07 AM

What Traders are Talking About:

* Germany, France promise aid plan. German Chancellor Angela Merkel and French President Nicolas Sarkozy said after talks Sunday their goal was to come up with a solution for Greece's debt woes, agree how to recapitalize European banks and present a plan for economic growth within the euro-zone by the G20 summit Nov. 3-4. No specific details were released, but investors reacted positively, as global stock markets, U.S. stock futures and commodities were broadly higher overnight in a show of improved risk appetite. With Germany and France seemingly on the same page, the biggest challenge now will be to get leaders from the 15 other euro-zone countries to come to agreement on an aid package in a timely manner.

The long and short of it: Investor risk appetite is strong to start the week, which is bullish for commodities, including grain and soy futures.

* Plains receive rains. Rains of up to 4 inches were reported across the Central and Southern Plains over the weekend. That's the first meaningful precip for many of these areas in months. While the rains aren't drought-breakers per se, they will promote more winter wheat seeding and the improved soil moisture will help with crop emergence. Meanwhile, weekend rains in the far western Corn Belt slowed harvest activity for some, but otherwise, combines were actively rolling across the majority of the Belt. Traders are expecting USDA to show corn and soybean harvest around 50% complete as of Sunday, although that data is delayed until Tuesday afternoon due to the Columbus Day holiday. This week's forecast calls for scattered, light midweek rains across areas of the western Belt. Otherwise conditions will be generally dry.

The long and short of it: Wheat futures rallied sharply overnight despite the heavy weekend rains across the Plains, which signals traders' focus is more on outside markets than fundamentals to start the week.

* Columbus Day holiday. Government offices are closed for Columbus Day today. As a result, there will be no USDA reports today. But grain and livestock markets (and most other markets) are open for normal trading hours.

The long and short of it: The lack of USDA data should have very little impact on grain and soy futures this morning. Attention is on outside markets, which were highly positive overnight.



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