Talk Of Low In Corn Starts To Build

October 5, 2011 01:06 AM

What Traders are Talking About:

* Looking for a low in corn. The sharp downturn in corn prices has many traders looking for the opportunity to jump back into the long side of the market. After all, many have a bullish long-term price outlook for corn. Helping fuel talk that the price slide has gone far enough was a forecast by the U.S. Grains Council Tuesday that China would need to import 5 MMT to 10 MMT of corn in 2011-12 despite record production. And there was talk yesterday of end-user buying late in the day session -- both on the board and in the cash market. But there are still plenty of headwinds for corn bulls, including harvest pressure and a very uncertain macro-economic situation.

The long and short of it: With bulls more actively starting to talk about a low in corn, it signals the attitude is prices have dropped too far.

* Informa crop estimates out today. Informa Economics is scheduled to release its October crop estimates this morning. With other private crop estimates up from last month, traders are widely expecting Informa to have at least a slightly more optimistic view on this year's corn and soybean production than it did in September. USDA will update its crop estimates next Wednesday, Oct. 12.

The long and short of it: While expectations for bigger yield estimates are building, there is still a lot of uncertainty over what USDA will do with planted and harvested acreage as certified acreage data is taken into account.

* Europe working to recapitalize banks? Talk is building that European finance ministers are increasingly seeing the need for a recapitalization plan for the region's banks. Recapitalizing banks would help restore investor confidence, which is needed to fuel an economic recovery. But details on any such recapitalization plan are lacking and investors don't seemingly have confidence any steps would be enacted quickly -- or quickly enough. Plus, Greece continues to wallow in its own muck and prospects for a default on sovereign debt are increasing. And Moody's downgraded Italy's debt rating by three notches.

The long and short of it: Investors are clamoring for a glimmer of hope from the euro-zone, but more than a brief relief rally in global markets seems unlikely at this point.



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