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Grains slump on profit-taking, weather

Jeff Caldwell 12/29/2011 @ 2:03pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

The mid-day trend continued through the closing bell Thursday, with corn, soybeans and wheat closing at session lows.

March corn ended the day 4 1/2 cents lower at $6.38 per bushel, March wheat was 6 cents lower at $6.45 1/4 per bushel and January soybeans closed out Thursday 10 3/4 cents lower at $11.87 1/2, according to Barchart.com.

Slightly improved weather conditions in South America -- where La Nina's kept things hot and dry at a critical developmental juncture for that region's corn crop -- and profit-taking were the main drivers of the downtrend Thursday, which came despite a late-session turnaround in the U.S. Dollar index, which turned lower after spending much of the day in the black.

Other factors seem to be returning to focus on the CME Group trading floor as well as the week winds down. ICAP Energy LLC Derivatives Manager Scott Shellady said Thursday attention is already turning to the January 12 USDA Crop Production report as well as a trio of outside factors.

"Chatter around the markets points to weather concerns, but I also think that we have seen a bit of a technical rally coupled with a quiet market. Speaking to one of the guys in the futures pit and looking at the charts I think we could see a rally to the $6.50 area, but the real tell-all will come on the 12th when we see the numbers," Shellady said Thursday, adding slowing Chinese economic growth, global economic sluggishness and the Eurozone debt crisis are also key factors to watch moving ahead.

But, just as the markets have been focused on the South American weather, those same types of concerns may not be far off at home, where Agriculture.com Marketing Talk senior contributor smokeyjay says Mother Nature could see a brighter-than-ever spotlight early in 2012.

"Some guys around here have already priced their current inventory and deferred it to 2012. BIG checks coming January 1," smokeyjay says. "New crop is a big 'if' as we are still trying to figure out whether we are in the drought cycle once again or things are going towards normal, whatever that is.  Very difficult to come to terms with a marketing plan when rainfall patterns and soil moisture levels are up in the air."

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Brazilian Rain and US Planting Outlook