New Lows in Euro, More Rain Possible in South America

Published on: 07:07AM Jan 05, 2012


·         Grains lower overnight; US$ strength and possible rains next week in S. America to blame
·         Early this morning, GFS model output is suggesting much heavier rains in some of the driest corn/soy areas in S. America; Although our lead forecaster is not yet convinced, longs in the market may exercise caution
·         Brazil’s top corn state, Parana, cut forecast for corn production to 6.4mmt vs. 7.4 in Dec
·         Outsides also mostly negative this morning grains, US$ higher again as the Euro plunges into new lows
·         Wall Street Journal running story this morning on shortages of seed corn throughout the country; Seed corn production down 25-50% in 2011 according to some sources
·         USDA to release Jan Crop Production report one week from today; Most traders anticipating bullish numbers at this point, pre-report estimates next week
Although the grain markets remain bullish from a technical standpoint, longs should exercise caution today. New lows in the Euro currency combined with the chance for heavier rains in S. American corn/soy areas next week could be enough to break the markets today. Keep an eye on South American weather updates. Outside commodities are actually holding up very well considering currency action.
As always, call the office with questions or concerns.
Joe Vaclavik

(312) 462-4438