Lower grains start expected
A lower start is expected this am, roughly 3-5 in wheat and corn, 6-7 in beans. The $ is higher while crude oil and gold are lower, a bearish combination for all the grains.
Further signs of Chinese government-directed credit tightening via the implementation of higher bank reserve ratios, which will reduce banks lending ability, were a major bearish influence in most commodity markets overnight. The fear is that a slowdown in the rapaid expansion of the Chinese economy will slowdown demand for many commodities that China imports, such as metals, ore, grains, etc, which would be bearish for these commodities. The Shanghai equity index fell almost 2.5% in response to this latest credit tightening move.
Some bullish traders are also fearful ahead of President Obama's State of the Union speech tomorrow night (7pm US Central time) in which he could continue arguing for restrictions on bank's derivatives trading activities. This could reduce demand by hedge or index funds for various commodities, including grains, which would have a bearish impact on these markets.
The Brazilian Vegetable Oils Industry Assoc raised their guess on the size of the Brazilian bean crop to 65.2 million tonnes vs 63.4 million early last month. Last year Brazil produced 57.2 million tonnes of beans. The USDA announced this am the sale of 118,000 tonnes of US corn to an unknown destination for the 2009-10 crop year.
Brazilian weather remains near ideal with ongoing rain across the main grain growing areas with the exception of the far southern state of Rio Grande do Sul. This beneficial pattern is forecast to continue through the weekend. The situation in Argentina is much less sanguine with hot and dry weather forecast to remain in place until the weekend, when some widely scattered rain and cooler temps are now predicted. In the meantime, temps could reach over 100 degrees in parts of the belt. Hot and dry weather is forecast to return early next week before rain and cooler temps arrive again the second half of the week. Traders will continue watching this situation closely - little damage is thought to have been done to Argentine corn or beans so far but this could change if rain doesn't arrive by the second half of next week.
Further signs of Chinese government-directed credit tightening via the implementation of higher bank reserve ratios, which will reduce banks lending ability, were a major bearish influence in most commodity markets overnight. The fear is that a slowdown in the rapaid expansion of the Chinese economy will slowdown demand for many commodities that China imports, such as metals, ore, grains, etc, which would be bearish for these commodities. The Shanghai equity index fell almost 2.5% in response to this latest credit tightening move.
Some bullish traders are also fearful ahead of President Obama's State of the Union speech tomorrow night (7pm US Central time) in which he could continue arguing for restrictions on bank's derivatives trading activities. This could reduce demand by hedge or index funds for various commodities, including grains, which would have a bearish impact on these markets.
The Brazilian Vegetable Oils Industry Assoc raised their guess on the size of the Brazilian bean crop to 65.2 million tonnes vs 63.4 million early last month. Last year Brazil produced 57.2 million tonnes of beans. The USDA announced this am the sale of 118,000 tonnes of US corn to an unknown destination for the 2009-10 crop year.
Brazilian weather remains near ideal with ongoing rain across the main grain growing areas with the exception of the far southern state of Rio Grande do Sul. This beneficial pattern is forecast to continue through the weekend. The situation in Argentina is much less sanguine with hot and dry weather forecast to remain in place until the weekend, when some widely scattered rain and cooler temps are now predicted. In the meantime, temps could reach over 100 degrees in parts of the belt. Hot and dry weather is forecast to return early next week before rain and cooler temps arrive again the second half of the week. Traders will continue watching this situation closely - little damage is thought to have been done to Argentine corn or beans so far but this could change if rain doesn't arrive by the second half of next week.
posted by InsightPublishing at
8:28 AM
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