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Grains kick off Tuesday sharply higher

Jeff Caldwell 01/31/2012 @ 10:09am Multimedia Editor for Agriculture.com and Successful Farming magazine.

Overnight strength in the grain pits based on anxiety about the EU debt situation spilled over to Tuesday's open, with corn, soybean and wheat futures all opening sharply higher.

At the open, March corn was 9 cents higher at $6.40 3/4 per bushel, while March soybeans were 6 cents higher at $11.91 1/4 and March wheat was 17 1/4 higher at $6.62, according to Barchart.com.

Tuesday's bullish start, after Monday's sharp downward move, shows a sort of "schizophrenia" in the grains that's been largely driven by risk associated with the European debt situation. That risk drives the Euro/U.S. Dollar relationship and in turn, looks to be enticing more money flowing back into the grain pits Tuesday, says ICAP Energy LLC Derivatives Manager Scott Shellady.

"Risk is back on. Stocks are higher. Euro is higher. Oil is up $1.50 while corn is up 6, beans up 4 and wheat up 11. Turnaround Tuesday is shaping up perfectly. The schizophrenia that is ruling the markets is front and center again today. Volumes have been low while moves have been volatile," Shellady said Tuesday morning. "With a stronger Euro, the dollar is weaker and its predictable consequences are upon us."

Meanwhile, the local news is fairly light for a lot in corn and soybean country. The weather remains on the warm and dry side, with many temperatures breaking records in parts of the western Corn Belt on Monday. It's a time when many in the business are already starting to look forward to the late-March USDA Planting Intentions report, which will likely have a lot to do with price direction heading into spring and summer.

"I think a lot of folks have "market whiplash"   and it's not even February just yet," says Cargill senior grain merchandiser and Agriculture.com Marketing Talk veteran contributor Ray Jenkins. "These fast spurts, both up and down, are hard on the psyche. I suspect there are a lot pricing objectives near $7, but unless you are in the black hole of central Illinois and eastward, that number is a long ways off...and likely not to come without more news, which is most likely in the late March reports."

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