Morning Weather Models Reduce Rain Chances for Argentina Next Week

January 6, 2012 01:55 AM

What Traders are Talking About:

* South American weather outlook -- not as promising for relief. Temps are expected to be very hot in Argentina through the weekend, increasing stress on crops. Morning weather models have pushed back rains chances for central Argentina to the middle of next week and then hot, dry conditions are expected to quickly return. In southern Brazil, above-normal temps and limited rainfall chances are expected through the middle of next week, although scattered rains remain in the outlook for late next week.

The long and short of it: This morning's forecast indicates reduced chances for significant relief from heat and dryness.

* Jobs data more upbeat than expected. The U.S. economy added 200,000 non-farm payrolls last month, which beat the average guess of 150,000. The unemployment rate dropped to 8.5% from a revised 8.7% rate in November. The Labor Department revised up October payrolls by 12,000 to 112,000, but lowered November payrolls 20,000 to 100,000.

The long and short of it: The U.S. dollar index moved higher on the news, which could curtail buying interest in grain and soy futures this morning.

* Weekly export sales disappoint. Export sales data for the week ended Dec. 29 came in well under trade expectations for corn, soybeans and wheat. Corn sales for 2011-12 and 2012-13 combined totaled 306,000 MT (traders expected 350,000 to 550,000 MT); soybean sales for 2011-12 and 2012-13 combined totaled 281,300 MT (traders expected 400,000 to 550,000 MT); and wheat sales for 2011-12 and 2012-13 combined totaled 168.100 MT (traders expected 300,000 to 450,000 MT).

The long and short of it: Considering it was a holiday week, disappointing numbers are not a surprise. Traders typically overestimate export sales expectations in holiday weeks. Still, not a positive for grain and soy futures today.


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