Outside Markets, South American Weather Point Grains Higher To Start 2012

January 3, 2012 12:12 AM

What Traders are Talking About:

* Argentina stays hot and dry. Central and southern Brazil received fairly widespread rains over the holiday weekend and also had cooler temps. Conditions remained hot and dry across central Argentina. Eastern portions of Argentina got a little break from extreme heat, but there was no rainfall activity. Forecasts call for more heavy, widespread rains across central and east-central Brazil this week, while Argentina is expected to remain hot and dry. In fact, current weather models suggest conditions will be hot and dry in central Argentina into mid-month.

The long and short of it: Weather remains most threatening in Argentina -- and for the corn crop.

* Will new year bring fresh fund buying? The flip of the calendar to a new year brings expectations funds will throw fresh money at the long side of commodity markets. Some years, the fund buying has lived up to expectations and some years it hasn't. But the start of the new year almost always brings heightened attention to fund activity.

The long and short of it: There is seemingly less hoopla around the fund-buying talk this year, which means it could potentially be a bullish scenario if funds are active buyers to kick off the new year.

* Outside markets point to strength in grains. Grain markets were closed overnight, but outside markets signal a firmer open this morning. The U.S. dollar index was under pressure overnight amid upbeat economic data out of Germany and China, while crude oil futures pushed above $100 as tensions between the U.S. and Iran appear to be escalating.

The long and short of it: The combination of price-supportive outside markets and generally bullish South American weather should spark a firmer start to grains in the first trading session of the new year.


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