Author: Michael Ferrari, PhD
VP, Applied Technology & Research
While everyone is focusing on crude as the directional indicator for commodities, there are two drivers in the agri complex that we are keeping a close eye on. The first is the weather pattern in South America. December weather was largely favorable in Brazil and Argentina for corn (vegetative phase, transition to silking) & soybeans (planting-vegetative), as well as the current wheat harvest. In addition, satellite indices are indicating healthy ground conditions when assessing productivity and soil moisture variables. The second factor is decreased buying from China. With rising domestic interest rates, excess liquidity may tighten and as a result, we may see less buying over the next three months – at least less than most analysts might be suggesting. As such, with most crop estimates having been raised for corn and beans, coupled with softer Asian demand, there may be some short term easing in futures (Mar10/May10). Also, when viewing the 3 mo chart, corn & beans are both well above the 50d moving average.
