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Grains to eye SA weather this week

01/16/2012 @ 2:55pm

After a day off, the U.S. farm markets will fire back up with tonight's electronic trading. The CME Group corn, soybeans, and wheat prices will try to rebound following last week's pounding from the USDA January Crop Production and Grain Stocks Reports. 

The CME Group corn, soybean, and wheat markets will begin the week's trading with tonight's electronic trade at 6pm CST.

Now that the government report is in the books, all eyes focus on South America's crop-stressing weather, analysts say.

"Friday's markets closed lower. Monday's global stock and commodity markets are pretty flat. And though less rain than expected fell recently in South America, more is in the 10-day forecast," says Al Kluis, Kluis Commodities. 

Kluis adds, "Even though most of the South American corn crop damage is done, it will be hard to rally the grain market until some additional weather problems develop in South America or the US."

Richard Feltes, RJ O'Brien vice president of research, agrees that all indicators suggest a lower grain trade tonight. 

On Monday, global equities were pressured by an S&P downgrade of 9 EU countries, Malaysian palm prices dropped in overnight trade, and estimates of Former Soviet Union wheat exports are creeping higher, Feltes wrote in a daily newsletter to customers.

"Most important, five-day rainfall of 65% coverage is expected in Brazil and Argentina.  Additionally, weekend rains hit key dry areas of southern Brazil's Rio Grande Do Sul, Parana and W Santa Caterina," Feltes says.

Last week, corn futures prices dropped 43-44 cents, 36-38 cents in soybeans and 19-23 cents in wheat. "All three now are trading below their 50-day moving averages," Feltes writes.

With the CFTC reporting Friday that managed funds extended their long positions before the USDA Crop Report, that could create a sell-off, Feltes says. "It feels like all markets are vulnerable to more liquidation."

Discuss this week's corn, soybean, and wheat markets in Market Talk.

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