AM Comments 12/07/12
Friday, December 7, 2012, 8:26 amSubmitted by: Dustin Weiner
Good morning!
Our markets are struggling to find direction this morning and are drifting lower after trading steady/higher overnight. The $US is stronger this morning which is applying pressure to commodities.
South American weather is improving as Argentina looks to have dry weather coming in while the dry areas of Brazil look to be getting a shot of rain. The South American “summer” weather is starting to look pretty favorable to production and bearish to sb prices.
Soybean demand/basis is still on fire at the gulf and the PNW. China keeps plucking beans out of the U.S. as they get closer to filling their needs for the pre-SA harvest time slot. This should be friendly to flat price but with the weather forecasts improving down there – it is hard for the big money to go long soybeans.
Corn demand is still plugging along domestically (ethanol, feed, etc) while exports are almost non-existent. If corn prices rally to the point where domestic crush margins turn red, we don’t appear to have an export market to lean on. So, going long corn could be a risky trade for the funds due to the relatively shallow, one-sided demand sector. Because of this corn should stay range bound for a while longer.
Next Tuesday, December 11th, the USDA comes out with their updated S&D numbers – we could see corn stocks balloon out while soybeans stocks could shrink, all due to the demand fluctuations mentioned above.
Currently
Corn is down 5 to 6 cents
Soybeans are down 9 to 11 cents
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