We are seeing continued strength across the grain/oilseed sector with soybeans leading the way, crossing and staying above the14 mark. All the primary sectors here trading well above the 200 day moving average, and with supply concerns mounting, the market seems to be locked in this bullish channel, which is likely to remain in place over the short term. With strong soybean demand, corn stocks and the stock-to-use ratio both at near 30-year lows and anticipated increasing demand from both the food and fuel sectors, we are maintaining a constructive view on the complex through February. Any weather events (such as recent floods in Australia) will serve to support stronger upside moves in the coming weeks.

The FAO has also highlighted the potential increases in food-related riots, some of which have been seen in Tunisia and Egypt over the last couple of weeks; such events will add to near term volatility and increases in long positions among funds.