The euro seems to be heading toward $1.40 which might be feasible. Could it sustain that level? I believe the issues overseas are systemic as job growth slows and debt issues worsen. If it hits that level be ready to short it. The S&P seems to be resilient even though job data is negative and earnings are so-so. The fact that it has reached 1300.00 area with no economic data to talk about is also concerning. These levels could be sustained due government intervention and corporate stock buyback programs. Is the consumer jumping in to these markets? The consumer is optimistic but they are watching spending and most likely not buying into the market, unless it is in their 401k. The technical levels that have been reached should be a warning that a sell-off of 10%-12% is possible.

Historical Information on the KW-W spread
As Premium Subscribers know, Matt Pierce frequently discusses intermarket spreads. In light of recent activity on the current spread Kansas City wheat against Chicago wheat, Matt offers this historical information from 2006 and 2007 on the spread:

These are historical numbers for intermarket spreads between KC and CHI wheat. These are highs for respective months.

KWN-WN 2006=128

KWU-WU 2006=117

KWZ-WZ 2006=110

KWH-WH 2007=92

—MPI

Strategies using combinations of positions such as spreads and straddles are no less risky than taking straight long or short futures or options positions. Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results.

Matt Pierce shares this news item of note…
WASHINGTON, Jan. 25, 2011 — Private exporters reported to the U.S. Department of Agriculture the following activity:

–Export sales of 2,740,000 metric tons of soybeans for delivery to China during the 2011/2012 marketing year; and

–Export sales of 110,000 metric tons of soybeans for delivery to China during the 2011/2012 marketing year; and

–Export sales of 114,000 metric tons of soybeans for delivery to Taiwan during the 2010/2011 marketing year.

The marketing year for soybeans began Sept. 1.

Goldman Sachs seems to be allowed to handle accounting procedures as they see fit. Apparently they had $5 billion in losses that they conveniently moved in a different area of the accounting books. Because they have a name that people are in awe of and the fact that they have billions to burn it is easy for them to pay fines. The own up to shotty procedures or law, pay the fine, and move on. When will full disclosure be mandatory? Maybe they think they are a hedge fund and the rules do not apply.

Jan. 12 (Bloomberg) — Argentine farmers won’t sell wheat, corn or soybeans from Jan. 17-Jan. 24 to protest the government’s latest policy on exports. Farm leaders spoke today at a press conference in Buenos Aires. Argentina’s Agriculture Ministry earlier today lifted export restrictions on wheat.

http://www.bloomberg.com/news/2011-01-12/argentine-farmers-won-t-sell-soybeans-for-week-in-export-controls-protest.html

By Whitney McFerron
Jan. 6 (Bloomberg) — The Chinese government’s anti-dumping investigation of U.S. dried distillers grains, a corn-based feed ingredient, may disrupt trade and result in higher duties on imports, the U.S. Grains Council said.
Distillers grains, commonly known as DDGs, are a by-product of making ethanol from corn. China’s current 5 percent duty on U.S. DDGS might increase to as much as 100 percent during the dumping investigation, which will take up to a year, according to Rebecca Bratter, the director of trade development for the Washington-based council.
China’s Ministry of Commerce announced on Dec. 28 that the government would probe unfair trade practices after receiving complaints from four domestic ethanol producers. The country is the world’s biggest user of grain.
“This is potentially disruptive, and China is a very critical partner for us,” Bratter said today on a conference call with reporters. “We are dedicated to the free and open flow of trade, and we certainly want to see this resolved in the most expedient manner possible.”
In the first 10 months of 2010, China imported $427 million of U.S. DDGS, or between 10 percent and 12 percent of U.S.
production, she said.
The four Chinese ethanol companies that filed the complaint represent about 50 percent of DDGS output in China, which produces about 3.5 million metric tons annually, Bratter said.

GrainAnalyst.com Premium Subscribers: Be watching for Matt’s special report next week on the upcoming WASDE.

It could be possible that the job report tomorrow could be better than expectations. This could bring the market to new highs and also affect the currency market tomorrow. Remember jobs need to be above 430k to sustain growth and of course help with confidence. Tomorrow is a day that one should be glued the TV and wait for trade recommendations.

By Michael Hirtzer

CHICAGO, Jan 5 (Reuters) - U.S. corn, soybeans and wheat rallied on Wednesday a day after a sell-off in commodities drew investors to grains, with soybeans surging 1.7 percent on talk of Chinese demand and concerns over Argentine crop weather.  U.S. corn futures rose after hitting a two-week low early even as the dollar rose about 1 percent on signs of an improving U.S. economy. [USD/]    Wheat futures also climbed after opening lower, led by futures for higher-protein wheat at the Kansas City exchange.    “Nothing has changed fundamentally. Everything went down on profit-taking and liquidation but the fundamentals are still bullish,” said Matt Pierce, analyst for GrainAnalyst.com. Wheat prices have been supported by excessive rains in Australia downgrading the wheat quality, while hot, dry weather in Argentina has supported both corn and soybean futures.

Chicago Board of Trade March soybeans were 19-1/2cents higher at $13.89 per bushel and March corn up 3-1/4cents to $6.11-3/4 as of 10:50 a.m. CDT (1650 GMT).    CBOT March wheat was up 4 cents at $7.93-1/4 and KCBT March wheat  up 7 cents at $8.56-1/4. Light showers this week benefited the pollinating corn crop in Argentina, but more dry weather is forecast and that could stress soybeans as the crop begins to set pods, said Don Roose, analyst at U.S. Commodities in West Des Moines, Iowa.    “The soybeans still have the crucial time frame to go through yet (in Argentina) and we’re supposed to warm up again,” Roose said.    “So it goes back to some of the same factors: China underneath the market on these breaks and we’re still not sure of the supply out of South America,” he said.  China was seeking shipments of U.S. soybeans for shipments in March and November and also shipments from Brazil this spring, analysts and traders said.  Jeffrey Currie, Global Head of Commodities for Goldman Sachs, on Wednesday said soybeans are a more attractive investment than wheat due to greater potential demand growth and limited supply base.  Soybean and corn futures eased for the first two days of the week after each commodity hit 29-month highs.    Investment funds have been heavy sellers while index fundshave also started to rebalance commodity holdings.    The dollar index  touched a one-week high following news that the U.S. private sector added more jobs than analysts expected. A stronger dollar makes U.S. commodities less attractive to exporters.    But commercial firms bought soybean and corn futures to take advantage of the break in prices.  “The market has been down three days in a row, it was hit hard so it’s due for a correction. Also, commercials were buying beans yesterday and again today,” said Glenn Hollander of Chicago cash grain house Hollander-Feuerhaken.    “We saw a broad-based commodities sell-off yesterday and the pressure is continuing today as the dollar is a bearishfactor for commodities,” said Ker Chung Yang, an analyst at Phillip Futures in Singapore. “For grains, losses should be capped because of unfavorable weather in U.S., eastern Australia, China and Russia. The weather issue is still lingering and investors can’t really overlook it.”  Grain and soy markets are unlikely to fall too far going into the U.S. Department of Agriculture’s Jan. 12 monthly supply and demand report, analysts say.