Grains look to start the new year with a bang - Up roughly 15 in wheat and beans, 10 in corn following similar overnight gains. The $ is lower, crude oil is up almost $2 a barrel and gold is sharply higher, up over $20 currently. All this is bullish for grains.

The index funds, which are always long, are expected to rebalance their portfolios starting as soon as tomorrow, a process that is expected to extend into next week. They are expected to buy tens of thousands of contracts of wheat, beans and especially corn. Additionally, fresh spec money is expected to flow into the commodities markets, including grains, over coming days and weeks as commodities are now looked upon favorably as a way to diversify outside of equities, reducing systemic risk. Of course, if all this widely heralded fund buying doesn't materialize, prices will fall sharply and quickly as the fundamentals do not justify even current prices, let alone higher ones.

South American weather remains very favorable and Chinese demand for US beans is expected to shift soon to South American origin. For now, however, go with the crowd and assume there will be large scale fund support to drive prices higher, but it remains a dangerous game.

Morocco will be in the market Jan 14 for a total of 350,000 tonnes of US wheat. Deliveries this am were 1000 beans and 5800 oil with no meal.

Argentina had a mostly dry weekend with more of the same forecast today-tomorrow. Up to 1.5" of beneficial rain is forecast Wednesday before dry weather returns the rest of the week. Brazil had up to 2" of helpful rain in Mato Grasso over the weekend with only light, scattered rain elsewhere. Scattered rain of up to 2" is forecast in Rio Grande today through Wednesday with up to 2" predicted in Parana later in the week. Up to 1.5" is forecast in Mato Grasso late this week. Overall, conditions remain very good in South America weatherwise.

Very cold temps in much of the US will increase livestock feed demand, which is friendly mainly for corn and meal.