Investors Still Far From Optimistic On Euro-Zone

September 28, 2011 04:19 AM

What Traders are Talking About:

* Investors still wary about euro-zone. It didn't take long for investor concerns with the euro-zone to resurface after some hope Tuesday European leaders may be moving in the right direction in their attempt to calm the financial waters in the region. German Finance Minister Wolfgang Schaeuble said increasing the size of Europe's current bailout fund is a "silly idea." Schaeuble said fiscal consolidation and structural reforms in debt-ridden countries are needed to resolve the current crisis and that monetary policy isn't the way to solve the problems. Within the euro-zone, Germany is the 800 lb. gorilla. So ultimately, what does or doesn't happen rests with Germany's desires and decisions.

The long and short of it: Pessimism toward the euro-zone has eased some, but investors are still far from optimistic.

* Traders cautious ahead of grain stocks data. In the commodity business, past performance is not indicative of future results. But USDA's past performance in the Quarterly Grain Stocks Reports definitely has traders playing it very cautiously ahead of Friday morning's Quarterly Grain Stocks Report. Traders seem very reluctant to actively add long positions given major surprises in this report over the past year-plus.

The long and short of it: Traders are wary of USDA coming with a higher-than-expected Sept. 1 corn stocks figure, which will be final ending stocks for the 2010-11 marketing year.

* No confirmation of Chinese corn purchases, but South Korean buyers loading up on corn. There still hasn't been any solid proof China bought U.S. corn on the recent sharp price break, although talk of that continues to float through the marketplace. South Korean end-users have been active buyers, purchasing at least 661,000 MT of corn since Sept. 20, export sources told Dow Jones newswire. Obviously, South Korean feed makers see the sharp price break as an opportunity to extend coverage, which signals they feel prices are headed higher once the pullback is complete.

The long and short of it: Given tight corn supplies -- in the U.S. and globally -- it's not surprising to see strong demand surface on the sharp price break. But traders have been lukewarm to active South Korean purchases as they wait to see if China buys corn.


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