There is nothing pretty about agricultural markets right now. We don’t have any upside incentive from fundamentals and now macros are falling to pieces. With US jobless rates climbing and no real threat of inflation there is no incentive to buy. With prices relatively cheap there is little incentive to sell, thus we are stuck in a range. I still feel we are entering a timeframe dominated by spreads and relationships. Watch the beans corn relationship for best action heading into planting.

Here is a good article that i found from Bloomberg stating Greeces credit rating might be lowered and the Euro losing ground against the USD and the Euro to new yearly lows…… This will have a huge impact on the precious metals markets….

“The euro fell toward a one-year low against the yen on speculation Greece’s credit rating will be downgraded as the country struggles to push through fiscal cuts demanded by the European Union.

Europe’s single currency also dropped toward a nine-month low against the dollar after Standard & Poor’s said it may cut Greece’s rating again by the end of March as a weak economy and political opposition threaten the nation’s ability to reduce the EU’s largest budget deficit. The dollar gained against 15 of its 16 major counterparts before a report today forecast to show U.S. durable goods orders increased.

“There are concerns that Greece may not be rescued,” said Satoshi Okagawa, head of the foreign-exchange forward trading group at Sumitomo Mitsui Banking Corp. in Tokyo. “This is causing selling of the euro and buying of the yen, and leading to risk aversion.”

The euro dropped to 121.10 yen as of 11:09 a.m. in Tokyo from 122.03 yen in New York yesterday. It fell to 120.71 yen on Feb. 5, the lowest since Feb. 24, 2009.

The 16-nation euro declined to $1.3494 from $1.3538. It touched $1.3444 on Feb. 19, the lowest since May 18. The European currency has fallen 2.6 percent versus the dollar this month, heading for a third monthly loss, its longest stretch since November 2008. The dollar fell to 89.75 yen from 90.15 yen.

The cost of protecting against default on Greek government bonds increased 13 basis points to 384 yesterday, according to CMA DataVision prices.

Rating Downgrade

“We believe that a further downgrade of Greece of one to two notches is possible within a month,” S&P analysts led by Marko Mrsnik in London said in a statement released late yesterday.

S&P cut Greece’s rating twice in December to BBB+ and signaled at the time it may lower it again. Greece has struggled to persuade investors it can slash its budget deficit from last year’s 12.7 percent of gross domestic product.

“I’m not sure if other nations have enough resources to help Greece,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “If the issue is neglected, that will stoke concerns about the euro. The dollar remains strong against the euro on a relative basis.”

Bookings for durable goods in the U.S. climbed 1.5 percent last month after rising 0.3 percent in December, according to the median estimate of economists in a Bloomberg News survey before the Commerce Department reports the data today. ”

http://www.bloomberg.com/apps/news?pid=20601083&sid=ar1hGOR.9mw4

Consumer confidence numbers were expected to be around 55-56 and came in at 46. Let’s talk real for a minute. The big banks, hedge funds, and traders do push their weigh around in the market and can set markets up or down. However, we the people the consumers run the show. If people are not spending money the market should sell off. These swings could go on for a few years which can even effect the technology sector of the market. This sector in my estimation is overbought and could sell off in the near future. Google and Apple are doing well but what about everyone else? The amount of money many companies spend on research and development may have to be cut back if consumers limit spending habits.

Following a break for Kidney surgery I am back…for some reason. There is little excitment on the floor with everyone looking at the USD and crude this week. Start looking at spreads and relationships for best trading opportunities as we move into March with these obvious on my morning wires. Overall do not get excited by the rally until we get above and consolidate above last week’s highs.

No surprises in the USDA grains and oilseeds outlook.Planted Area 2010:A wet fall combined with lower prices and demand will reduce winter wheat seeded areas as follows: HRW -3.2 M acres to 27.8 Ma; SRW -2.4 Ma to 5.9 Ma. Spring wheat is expected to increase slightly. Overall, 2010 wheat plantings will be the lowest since 1913.As reported yesterday, corn plantings will increase to 89 Ma from 86.5 last season. Main factors for the increase will be a higher return per acre due to lower fertilizer cost and higher demand for 2010-11.Soybeans will decline 500K acres to 77. Reasons are lower return per acre this season in comparison with corn, large South American crop, lower demand (exports), and lower double crop soybeans area lost slightly to cotton and corn.USDA estimates that out of the 2.5 million acres that expired from the CRP program in 200c, les than 1/2 will be planted.Production:Wheat production will decrease 12% to 1.945 MB due to lower area and yields. National yield average is projected at 42.6 bpa, 0.9 lower due to expectations of yields coming back to trend.Corn production will decrease 60 million bushels to 14.894 million bushels in 2010. Higher planted area will be offset by lower yields, which are expected to decrease to the trend at 160.9 vs the 165.2 estimated for 2009-10.Soybean production will register a decrease of 100 MB to 3.260 MB due to smaller area and yields. Yields are  expected to drop to trend 42.9 bpa vs the 44 reported for last season.Demand and ending stocks:US consumption of wheat will increase 60 Mb and exports will increase 25 million bushels. This will result in ending stocks falling 40 million bushels to 940 mb. Stocks to use ratio will decrease to 44.8% form 48.9%. Average farm price will be $4.90Corn stocks will decrease 65 Mb to 1.654 bil bushels. This is the result of lower production, higher exports (up 100mb), higher demand from ethanol (up 200 mb) vs lower feed (down 200 mb). Stock to use ratio will decrease to 12.5% and avg farm price wil be $3.60.Soybean crush will decrease 65 mb to 1.655 bb due to lower soy meal exports based on SA competition. Soy exports are to decline 75 mb to 1.325 bb. Ending stocks will increase to 330 mb and avg farm price will drop to $8.80.Soy meal demand is expected to fall domestically due to lower livestock consumption in the US and lower exports. Avg price is expected to fall to $260 per short ton in 2010. Stocks will increase.Soy oil demand will increase in 2010. A trend from manufacturers to substitute bean oil to other veggie oils is expected, partly offsetting the increase in demand from biodiesel. Soy oil stocks will fall.Remarks:Focus this year is more towards sustainability, technology, and social aspects of rural America than biofuels, commodity prices, speculation, and supply/demand. The USDA did not give estimates regarding South America, only that world grain and oilseed stocks will increase as a result.USDA did not answer questions regarding of the impact in demand if Biodiesel tax credit is not passed by Congress or if US ethanol blend is increased from 10% to 12% or more.

Interest rates will be going higher!  Just think about it, as states and countries find themselves in budget deficit, they will have to pay more to borrow money because of the slippage in their ratings.  This leads to higher interest rates all around as people value risk more carefully.  The thought being that if the states and countries have to be bailed out…..oh we forgot, refinanced, that cost will be borne by the larger entity, here in the states, it is the government, in Europe it is member of the European Central Bank.  We have seen wealthy countries bail out their poorer, more leveraged relatives, case point Dubai.
 
Here in the states we, the home owners, find that our real-estate taxes are increasing.  House values continue to retreat and yet, we must pay more in real-estate taxes.  Why, because we are paying for those neighboring homes that have gone into foreclosure.  Crime is on an up-tick.  Even on safe streets, we have an increase in break-ins and robberies as the desperate become more desperate and brazen.  What is to be done?  The world is becoming a less friendly place to work in and to live in. 
 
People today, who are employed, continue to have trouble making their bills.  The tax increase felt by the increase in real-estate taxes along with high utility bills and other increases are causing the steady earner to fall behind.    Credit card companies, instead of understanding that some money is better that no money on a bill, are recklessly raising the rate that they charge on their cards.  One of our cards  is charging almost 26%!  Naturally, we will be closing that account permanently. You would think the financial wizards that run the credit card companies would understand that higher rates on already stressed balances will likely lead to default which will lead to additional write-downs on their financial statements.  Why not reduce interest rates on the cards so that the balance can be paid.  It seems like moronic behavior, wonder why people are getting into credit card trouble, look at the way those companies are run.  So where is the spending going to come from?  Certainly apparel is cheap enough and electronics seem to be cheap as well, but with the current flock of cost increases just to live, who can afford a new outfit or another gadget that you really don’t need?  
 
What impact will all this have on inflation? I suspect once rates move up, so too will inflation, which should be supportive for commodity values. However, the transition will apt drive prices lower as we move from low to higher rates and that may take a while.

Early upside momentun was reversed due to weak macro markets and a strengthening USD. Talk from the EU has Germany balking on the Greece bailout. US gulf news has china taking 4 cargos over the next 12 days pulling front end bean basis through the roof. The interesting factor is they (china) is also loading out of brazil! Consumption continues!

Am I misreading this! This is so very wrong!

I find it curious that while President Obama is adamantly against off shore drilling for our own country the good old USA, he signed an executive order to loan 2 Billion of our taxpayers dollars to a Brazilian Oil Exploration Company (which is the 8th largest company in the entire world) to drill for oil off the coast of Brazil! The oil that will come from this operation is for the sole purpose and use of  China and NOT THE  USA!
 
Now here’s the real clincher…the Chinese government is under contract to purchase all the oil that this oil field will produce, which is hundreds of millions of barrels of oil.The US gains absolutely nothing from this transaction whatsoever! Wait, it gets more interesting. Guess who does?
 
The largest individual stockholder of this Brazilian Oil Company that’s who, do you know who that is? Why BILLIONAIRE, George Soros, that’s who! 
 
Gee, wasn’t he one of President Obama’s most generous financial supporter during his campaign? I’m shocked!
 
How come this isn’t front page news?In every paper in America?
 
Below is the Wall Street Journal article to confirm this.
 
http://online.wsj.com/article/SB10001424052970203863204574346610120524166.html

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Gold liquidated some $75 last week to $1,045 as the Euro/USD gained momentum with Greece’s inability to their pay debt.  The $1,070 did hold very well but ultimately the selling pressure was to much and thats when you had it sel right to $1,045 with many sell stops being activated below $1,070.  Now the next support is this $1,035 level and I believe you will see some buyers at that level.

By Siobhan Hughes    Of DOW JONES NEWSWIRES   WASHINGTON (Dow Jones)–The U.S. Environmental Protection Agency on Wednesday gave high marks to Brazilian ethanol and cellulosic ethanol, setting a new direction for the industry as it issued standards for the amount and kinds of biofuels that may be added to the nation’s motor-fuel supply.   The EPA said that some 12.95 billion gallons of biofuels will have to be added this year, as required by law. Some 6.5 million gallons must come from cellulosic ethanol. And 1.15 billion gallons must come from biomass-based diesel over the two years through 2010.   The decision reaches every aspect of the biofuels industry, determining winners and losers from among a host of crops and production processes.Currently, corn-based ethanol is the predominant biofuel, but a 2007 law limitsthe amount of biofuel that may be derived from corn starch. The EPA must write rules to steer the nation into new types of biofuels.   The winners included sugarcane-based ethanol and cellulosic ethanol, which the EPA said were cleaner than traditional gasoline and would qualify as the sort of advanced biofuels that the 2007 law mandates. The EPA also indicated some corn-based ethanol plants may be considered clean, provided that they operate using “new efficient technologies.” That will affect the  construction of new corn-based ethanol plants, which must generate fuel with 20% less greenhouse-gas emissions than gasoline.   The mandate to use 1.15 billion gallons of biodiesel in 2010 could inject new life into the ailing industry. U.S. biodiesel producers were crippled by the lack of implementation of legislative requirements to produce more biodiesel; by the end of 2009, the industry was operating at 15% of its capacity. Total industry capacity–mostly built during the pre-recession rushto produce renewable fuels–is about 2.7 billion gallons a year.   Imperium Renewables Chief Executive John Plaza said that the rules were “the best news we’ve had in a long, long time.”   “We’ve had a rough couple of years as an industry, now we’re back into the light as being a solution to the nation,” he said in a phone interview. Seattle-based Imperium owns one of the largest biodiesel facilities in the country.   The oil industry cemented its status as out of favor with the Obama administration. The new EPA guidelines did not increase the statutory requirement for the amount of ethanol to be used this year. But in the long term, the push for increased biofuel usage threatens the profitability of the already struggling U.S. refining industry, as vegetable-based fuels replace traditional fossil gasoline and diesel. Some refiners, like Valero Energy Corp.(VLO), Sunoco Inc. (SUN)  and Murphy Oil Corp. (MUR) have bought ethanol plants in order to meet blending requirements.   By law, the U.S. must use 36 billion gallons of biofuels a year by 2022,with 21 billion of those gallons in the form of “advanced biofuels.” As part ofan effort to decide which biofuels to promote and which ones to disqualify, the EPA had to set a standard for measuring greenhouse-gas emissions from biofuels.The result was a score card that gave various types of biofuels grades for cleanliness.   The EPA said ethanol from sugarcane–common in Brazil–produces at least 50%less greenhouse-gas emissions than gasoline, the threshold for qualifying as an advanced biofuel. In a boost to algae, the EPA said diesel from algal oils also qualifies as an advanced biofuel and could be used to satisfy biodiesel mandates. Cellulosic ethanol, which is derived from the non-edible part of crops, produces greenhouse-gas emissions that are more than 60% cleaner than gasoline, the agency said.   Verenium Corp. (VRNM) Chief Financial Officer Jamie Levine said that the biggest boost for the cellulosic industry may have come from the EPA’s decision to set a price for the amount of money that blenders would have to pay forcredits in the event that they couldn’t buy cellulosic ethanol. The price appears to be high enough to support demand for cellulosic and encourage investors, he said, though he is still studying the details. Cellulosic ethanol currently isn’t broadly available on a commercial basis.    The EPA picked winners and losers after taking another look at the effects around the world of relying more on biofuels. Environmentalists have warned about the ripple effects as pastures are cleared to make room for biofuels crops. In a worst-case scenario, forests must be cleared in order to create new pastures, leading to deforestation that harms the environment because old-growth forests absorb high levels of carbon dioxide. The ethanol industry has said those claims are overstated.   EPA Administrator Lisa Jackson sided with ethanol makers on that score,telling reporters such indirect effects “were different and lesser than we thought.” She said the EPA’s earlier analyses had focused too little on productivity gains on existing farmland. She also said the EPA had decided to look at effects in 160 countries, up from 40 in its original analysis.   “I don’t agree that we changed the science to fit any outcome,” Jackson said.   Soybean-based biodiesel companies were among the beneficiaries of the review, after the EPA said that soybean-based diesel counted as an advanced biofuel. The biodiesel industry had earlier feared the worst when EPA officials said they would include “indirect land use” considerations in their calculations of greenhouse gas reduction.   But corn-based ethanol companies expressed concern that the EPA had gone too far. “EPA still relied on the disproven theory when all of the data shows that ethanol production continues to improve and isn’t requiring new land,” Jeff Broin, the CEO of ethanol producer POET LLC, said in a statement.   Environmentalists calibrated their reaction. Jonathan Lewis, an attorney with the Clean Air Task Force, said the EPA’s analysis “refutes the common misconception that biofuels are uniformly beneficial by showing that corn ethanol can be even worse for the environment than gasoline.” But he also said the EPA “appears to have bent over backward to allow some highly problematic biofuels to meet the environmental criteria set by Congress.”