What Traders are Talking About:
* Rain chances lessen for Argentina, southern Brazil. Forecast models continue to indicate some ares of Argentina and southern Brazil will see the first meaningful precip in over a month this week. But the rain event isn't expected to be as widespread as previously thought. Rains will move into Argentina by tonight, with central production regions likely to see scattered 0.5 to 2 inch rains Tuesday and Wednesday. Temps are expected to trend slightly cooler than normal the second half of the week, although a return of hot, dry conditions is expected by next week. Rains are forecast to move into southern Brazil the second half of the week, although they will likely move north of Rio Grande do Sul. There is another chance for light, scattered rains in the extended outlook for southern Brazil next week.
The long and short of it: The forecast does offer some hope of brief relief from heat and dryness, but not as much as forecast models suggested going into the weekend.
* Markets await Merkel, Sarkozy meeting. German Chancellor Angela Merkel and French President Nicolas Sarkozy are meeting this morning to discuss ways to boost economic growth and finalize details of a deal to increase fiscal coordination in the euro-zone. Meanwhile, there is growing concern in Greece (again) after weekend reports the IMF is losing faith the country will be able to fix its sovereign debt problems. Also, an adviser to Germany's finance minister told a Greek paper a 50% writedown of Greek debt is likely not big enough.
The long and short of it: The euro worked higher, driving the U.S. dollar index lower, in corrective trade overnight. But investors are expecting the euro to continue its recent drop amid ongoing financial concerns.
* Barrage of USDA reports Thursday. USDA will release its Annual Production Summary, Supply & Demand Report, Quarterly Grain Stocks Report and Winter Wheat Seedings Report Thursday morning. Because there is so much data released, these reports have potential to be major market movers. In fact, sharp to limit price moves have been seen in grain and soy futures after each of the last five January crop reports.
The long and short of it: In addition to South American weather and the euro-zone situation, traders also have USDA's barrage of report data this week. Price action could be very volatile.
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