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PitGuru.com's Grains Analysis: Jan 03, 2012
Monday, January 02, 2012
by PitGuru.com Authors of PitGuru.com
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The Grains Review
For the week of January 3, 2012
By Matthew Pierce
Coming back from the New Year holiday break the market looks at a higher move based on the following factors. First, the Euro is holding ground against the USD sitting just over $1.30 to start the week. Sentiment towards a stronger Euro is growing with optimism over long term debt solutions gathering steam. Crude remains well over $100.00 basis Feb due to continued tensions between the US and Iran. This escalated over the weekend with an Iranian test of a cruise missile that would be capable of hitting a US carrier. I hope they are not that stupid to actually try. Both factors are within the recent traded range but the sentiment is more bullish today which also helped Asian markets to a higher trade. On the fundamental side traders have a rally in both Palm oil hitting 3 month highs and EU wheat which hit multi month highs. Both are following momentum garnered from the major weather story developing in Argentina and to a lesser degree Brazil. Over the previous 4 days they have seen .10-.40” of good coverage showers fall in Mato Grosso De Sol with Parana receiving .50-1.20”. South into Paraguay and Argentina the rains were far less substantial which focuses the attention of the trade. Today traders are looking at scattered rains in Parana with MGDS drying out while Argentina remains dry. Temps are moderate to warm so no obvious threat from this input. Overall the fundamental factors are supportive of a continued rally from what was started last week.
Looking back a bit I see a solid recovery all over the floor. This is due in large part to growing technical momentum and bottom picking with the commodity sector under performing compared to equities. This is supported by a jump in OI in corn on Friday with CN up over 5,000. This should continue with plenty of money sitting around looking for a “hot” home for 2012. If the money moves in markets are looking at a continued rally through the WASDE report on Jan 12. At that point they will need a fundamental backing for the rally to continue. There is growing concern over a regional conflict which should continue to add premium to crude prices. If prices spike above $120.00 there is no doubt in my mind that corn and the rest of the floor will follow. If crude backs up on world recession fears around $70.00 the Ethanol bid will disappear hammering demand which will in turn hammer corn and agricultural commodity prices. If the Euro makes any move back towards $1.40 commodities will continue their pop. If the USD makes a move approaching $1.10 then commodities will suffer as currencies cap value. The macros are a major concern moving forward so continue to focus on these inputs while making any market move.
Recent articles from this author
- PitGuru.com's Grains Analysis: May 14, 2012 - Sunday, May 13, 2012
- PitGuru.com's Grains Analysis: May 07, 2012 - Sunday, May 06, 2012
- PitGuru.com's Grains Analysis: Apr 30, 2012 - Sunday, April 29, 2012
- PitGuru.com's Grains Analysis: Apr 23, 2012 - Sunday, April 22, 2012
- PitGuru.com's Grains Analysis: Apr 16, 2012 - Sunday, April 15, 2012
About the author
Daniel Cronin - PitGuru.com's Energies & Metals Guru Daniel Cronin has spent years on the floor of the Nymex as part of one of the largest energy floor brokerages in the business. His extensive experience stems from not only his Pit background but also through intense studying and implementation of complex technical analysis and market trading techniques via the mentorship of the now retired Ralph Acampora. Mr. Cronin brings subscribers a rare combination of book smarts and real world trading experience in one of the most volatile market sectors in the futures industry. Matthew Pierce - PitGuru.com's Grains Guru Mr. Pierce is a unique acquisition for Futures Press Inc. in that he has an unmatched level of real hands-on experience within the industry in addition to his floor trading expertise and top notch education at the University of Illinois College of Agriculture. Matthew has literally cultivated the perfect professional career as a grain expert by working with the industry's most recognizable companies such as Cargill, LaSalle Group, Conagra, Walsh Trading Inc. and many more. In addition to trading on the floor of the Chicago Board of Trade, Mr. Pierce writes what many in the business believe to be the best kept secret amongst trading reports available in the industry. Jurgens H. Bauer - PitGuru.com's Softs Guru Jurgens owns and operates his own order execution firm on the ICE trading floor. He has been a member since 1987. His firm, Jurgens Bauer and Associates, specializes in executing option orders for a wide array of customers and a variety of industry participants, including individual speculators, funds and members of the trade. While Jurgens has been an active member of the trading community he has also spent time since 2000 working at raising awareness of environmental commodities, educating industry professionals on emissions trading, brokering transactions between private counter parties and developing SO2 and NOx contracts for the NYMEX. Frank LaMantia - PitGuru.com's Financial Guru Soon to be Dr. LaMantia, Frank is not only one of the most educated traders on Wall Street, but also maintains an industry resume of substance and depth. Frank has worked extensively on an Institutional preferred stock syndicate desk, as a government bond specialist, and as a financial advisor all the while achieving multiple licenses in the finance field. With an extensive and impressive client list (including Citibank, Bear Stearns, Lehman Brothers, AG Edwards, Mesirow, UBS, and numerous Hedge Funds), Mr. LaMantia brings his one-of-a-kind background to his current occupation of full time trader.
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