New Month, What's Next?

The sixty million dollar question today has to be what sort of mood are the funds going to be in this afternoon? Now that we are into December, they should have had chance to fully digest recent market events along with their Thanksgiving Day turkey.

Recent developments include the "Dubai Jitters", the EU approval of Sygenta GM corn variety MIR6045, last Friday's USDA weekly export sales and shipments plus last night's harvest/planting progress.

The Dubai situation seems calmer today, as Dubai World have announced that they are in restructuring talks over USD26 billion of debt, that's less than half of the kind of money that was being bandied about last week.

Meanwhile Dubai’s ruler and United Arab Emirates Prime Minister Sheikh Mohammed Bin Rashid Al Maktoum has said that last weeks comments by the country's government, which appeared to suggest that they were distancing themselves from Dubai World's problems, had been "misunderstood".

Initial fears that Dubai World might be left to stand, or possibly fall, on it's own two feet appear to have been allayed. Subsequently the sudden rise in popularity of the dollar that we saw late last week has evaporated, and the downtrend looks set to continue.

That will help crude oil, which also has steadied following news emerging over the weekend of the capture of another supertanker by Somali pirates.

Last week's USDA export sales for soybeans were what we've become used to at 1.1 MMT, the surprise was the volume of actual shipments - almost 2.5 MMT with over 1.8 MMT destined for China.

Another supportive factor for soybeans (and corn) was the news that the Chinese government would support domestic prices at the equivalent to a generous USD548/tonne and USD220/tonne respectively.

Yesterday's news that the sloth-like EU Commission had finally approved Sygenta GM corn variety MIR6045 for import may also provide a shot in the arm for corn as it will now also potentially allow the resumption of EU imports of DDGS and Corn Gluten Feed. In addition, the possible "contamination" of US soybeans/meal with traces of this GMO corn variety is now no longer a threat, which could boost US exports further.

Another potentially very supportive factor for corn would be if the US Environmental Protection Agency were to raise the maximum amount of ethanol blended with gasoline from 10 percent by volume now. The EPA is expected to make an announcement today over an industry request to boost that to 15 percent. That seems unlikely, but some analysts are hoping for a compromise of 12 percent to get approved. With around a third of this season's US corn crop destined for ethanol production already, that would have a significant impact on further increased demand.

There's a fair bit of ammunition there, should the funds decide that they need it, to encourage some new money to come into the market at the start of the month. Time will tell.