Grain Traders Eye Demand News, Europe and Harvest Activity

October 17, 2011 01:44 AM

What Traders are Talking About:

* Waiting for the next batch of export demand. Last week featured strong activity in the export market, as end-users used the recent sharp price break to actively book needs. If end-users truly believe grain and soy prices are headed higher, they should continue to buy this week as prices are still "cheap" compared to where they were in late summer. Strength in basis suggests there should be more near-term export activity. More strong demand news would be a further indication seasonal lows are in place.

The long and short of it: With harvest quickly moving forward, grain and soy traders are becoming more focused on demand.

* Follow the bouncing ball in Europe. Participants in the weekend G20 summit of finance ministers and central bank heads emerged from the meeting feeling European leaders are ready to address the region's financial problems. While progress is seemingly being made, German Finance Minister Wolfgang Schaeuble said the European summit on Oct. 23 would not present a definitive solution for the euro zone debt crisis. As a result, there's a little less willingness of traders to take on risk to start the week.

The long and short of it: Investors may reel in their risk appetite a little today, but there's still the belief a worst-case scenario was recently factored into markets which opens the door to a further relief rally.

* Harvest rolling along quickly. Rains across parts of the Corn Belt last week did little to slow harvest efforts and traders are expecting strong harvest progress to be reflected in this afternoon's crop progress data from USDA. This week's weather forecast features mostly dry conditions across much of the Corn Belt, but rain and wind may become an issue in Ohio, Michigan and parts of Indiana, depending on the track of a strong storm moving along the East Coast.

The long and short of it: The areas where rains and wind may be an issue this week are also the areas where crop development is delayed. As a result, impact on harvest will be limited.


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