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CENTRAL ILLINIOS | We read every day about the turmoil in Europe and it's affect on the corn market but I question if it is that great. The USDA is projecting corn imports for 2011/12 at 4 MMT for the EU compared to Japan 16.1 MMT, Mexico 9.2 MMT, Southeast Asia 7.0 MMT, and South Korea 7.7 MMT. So it looks to me like if the USD gets stronger against the Japanese Yen or some of these other currencies that has a much greater impact than getting stronger against the Euro.
We tend to watch the US dollar index but it is 58% weighted to the Euro and only 12.6% to the Yen. We need a dollar index weighted to the contries currencies that actually import corn, in proportion to how much they import, to have a better predictor of the effect of the dollar's value on corn prices.
Having said all of that I think fund liquidation is the factor driving the corn market at this time. If the Euro collapses completly I suspect it will take a long time and not happen overnight but all the while the USDX gets stronger every day. You can track the UDSX here http://www.farmfutures.com/ffQuotesElectronic.aspx | |
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value of a dollar
