Commodities markets although quiet remain unsettled due to threats by Iran, economic recession and weather affecting South America.
On the technical side markets are oversold across the board and account for the recent rash of selling in corn and bean oil. However conditions are right now for a rally in corn. Growing conditions in the southern hemisphere support beans more than corn at present. With the continuing acreage shifts in Brazil and Argentina there is little reason for pressure on corn now.
Crude is oversold with sentiment growing on tension between the world and Iran.
Iran's threatened “hit” on Turkey if the US or Israel attack made the world step back. Crude oil is trading again at $100.00 (basis FEB) offering a reason for all commodities to rally today following the recent beat down.
While immediately the Euro situation improved marginally with no implosion over the weekend reports of a mild recession will limit any upside interest. Add to this increased bond sales coming from Portugal,Spain and Ireland, gains will likely be limited.
Demand for Corn and Beans remained quiet. China's demand for corn could push markets higher today after taking 17 million over the past two weeks. Apart from this corn demand is coming from Ethanol on the domestic side with margins now above 80 cents. Bean demand is quiet.
Wheat buying from Japan surprised markets - switching from corn into feed wheat. On the supply side weather in Argentina is an issue with the central region drying out over the next fortnight with no real break seen. This could stress wheat and corn more than beans.
In Ukraine the old crop harvest is complete with the government raising total production to 55MMT, about 1-2 MMT above the previous estimate - not counting the winter crop which still has problems due to drought and high winds. The overnight rally and expected day session rally are more heavily influenced by crude, the Euro and equities following black Friday.
