A LITTLE RAIN............ The dry weather in South America has the Chinese in buying grain as a weather hedge, but totals that reflect concern, but not panic. Last week's weekly export sales report showed China was in for 188 t.m.t. of corn, versus the two prior weeks of 58 and 123. They also purchased 422 t.m.t. of beans versus the two prior weeks of 188 and 354 so, were seeing an increase in buying but no panic buying, at least not yet. By January end, should weather continued to erode yields of corn and beans in Argentina and Brazil purchases could double or more. What China can't get seasonally from South America in February through March, they will have to fill the hole at US ports. Weather this week was as expected, hot and dry all over Argentina and only light rain in South Brazil giving us a sharply higher opening to start the week. The last three weeks, we went long into the weekend looking for the start of the new week to trade higher and price in another hot dry week but this week looks different so don't buy going into the weekend. WXRISK.COM the weather site, sees next Tuesday and Wednesday as rainy in Argentina with coverage of 60% of their area with .50 to 1.50 inches of rain. This suggests holding off from buying until Monday. Should Monday see a opening break in prices to price in the wet weather in front of them, buy that break and get long on two issues. ONE, the 11 to 15 day Outlook sees a return of the heat dome to Argentina by Saturday, January 14. This will have traders back in buying the overall drought pattern, as one rain doesn't make a crop. TWO, the USDA monthly crop reporter is out at 7:30 AM Central Time, Thursday, January 12. The fear is the report may lower final 2011 corn and bean production due to late crop season dry conditions and lower South American corn and bean production, all leading to lower US and world ending stocks. The market trades fear before fact. Because of the short holiday week, this will be our only report until next Tuesday. Trade timing is not as chart important as what day we find the low and expect to turn up and that day is Monday when the opening low range will hold as low for the week. The charts say 6.21 is the worst-case downside scenario for March corn on the low side. For March means it's 11.85. Upside potential for corn next week is 6.76 and beans 12.60. The PFG 2012 research report should be out by Monday or Tuesday of next week. There's two ways to get a copy. One, go to the PFG website and pull it up or send me your e-mail address and I will e-mail it to you as soon as it's out. My e-mail address is T. Hannagan@PFGbest.com.
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