Monday Morning Markets

Asian stocks have the jitters again, with Japan's Nikkei setting a two month closing low on continued worries over economic recovery in Europe, despite assurances that Greece will stick to it's part of the bargain.

The euro is consequently under pressure again, at around 1.37 against the dollar, not too far away from the 8 ½ month low just under 1.36 hit on Friday.

Crude oil is up around 75 cents on tensions between Iran and the West, and optimism that another widespread cold snap across large parts of the US will get consumption up and stocks down. Even so crude oil is still below USD72/barrel, more than USD7 or 10% below where it was at the end of 2009.

The overnight grains are taking some solace from a slightly weaker dollar and firmer crude oil, with eCBOT wheat around 6 cents higher, with corn up 4-5 cents and soybeans up around 12 cents.

The USDA are expected to cut their 2009/10 ending stocks projections for all three tomorrow. Traders are probably taking a bit of cover and booking some profits ahead of this report, as the USDA have tended to throw in the odd unforeseen surprise recently.

This report, and the fortunes of the currency markets, seem likely to shape which direction prices will take this week.

Of the three main commodities the one I'd be least confident about getting the forecast stock reduction is wheat. Soybean sales and exports have been holding up exceptionally well so they should get their reduction all right, but the market knows that their are record crops waiting in the wings in South America, which may temper any price rise potential.

Corn possibly has the best possibility of putting in some sort of rally over the coming month in my opinion, for reasons outlined below. We won't have any word from the USDA on planting intentions until March 31st, and whilst I don't exactly see corn roaring away the recent decline may have been overdone, especially as it was largely brought about by some questionable accounting from the USDA.

Meanwhile whatever corn is still left in the fields has just had another 2 feet of snow dumped on it over the weekend. Five percent of US corn was still in the field December 22 when snow began piling up, preventing harvesting from finishing, according to Gail Martell of Martell Crop Projections.