The overnight markets are rolling over as the morning is progressing as once again there is not much of any bullish influences in any market so far. The beans are down 2-4 cents, meal has lost $1, oil is down 5-10 points, corn is down 3-4 and wheat is down 5-6.

The weather in SA is still very good and improving in parts of Argentina that have been excessively wet. The forecast continues to point towards very good growing conditions throughout the entire region in Brazil and now appears that things are back on the rise for Argentine production in both beans and corn. With each passing day that weather is good is a day closer to record production out of SA, it’s now moving into the middle part of the season and without any changes in forecast over the next few weeks the market could head into 2013 with an abundance of product.

The OI shows that the liquidation in corn is taking place as it fell by 12946 on Friday, wheat fell by 1556, beans were down

672, meal was up 807 and oil increased by 6671. The basis levels for both beans and corn remain stout with beans still trading in the area of +$1.20, corn inched higher late last week with the flat price break. The SA markets seem to show that there is still corn available and with a lack of beans available it appears that corn will continue to be exported. The weekend saw a return to the wheat demand as Saudi Arabia bought 295.0mt, Iraq bought 210.0mt and Egypt bought 115.0mt.

The outside markets are mixed with equities marginally lower, crude oil is up .75 on news that Chinese economic data is improving, natural gas is down .02, sugar is up .01, cotton is up .21, DCE is higher in beans, meal and oil but lower in palm oil and corn, the Matif markets are all lower and the MDEX finished higher.

The USDA will release its monthly S&D figures tomorrow which typically don’t change all that much during the month of December, what is expected is to see a slight reduction in the bean CO figure as crush and exports will be increased while the corn CO figure is expected to increase marginally as exports continue to lag as well as domestic off take being less than anticipated.

The CME will list the short dated new crop options starting January 2nd 2013; these are fantastic tools to trade new crop without having to pay new crop prices.

The January options have 2 trading weeks left and with the USDA report tomorrow these could have some short term value for the outside chance that the USDA lays an egg tomorrow. As we have mentioned over the past few weeks the big inverses in future spreads are starting to crumble, especially in corn, it still seems to favor owning gamma over Vega as these spreads still have tremendous movement that will be coming in the next few months. The deferred BO options are starting to fall with BON puts trading down to 17%.

Editor’s Note: Daily Grain Commentary readers who are equity investors/traders only can gain access to the grain markets through the following exchange traded funds (ETFs).

Grain Markets/Indexes

ELEMENTS MLCX Grains Index Total Return ETNN (GRU, quote)

iPath Dow Jones-UBS Grains Total Return Sub-Index ETN (JJG, quote)

Power Shares DB Agriculture Trust (DBA, quote)

Corn

Teucrium Corn Fund (CORN, quote)

Wheat

Teucrium Wheat (WEAT, quote)

About OTC Global Holdings

Formed in 2007, OTC Global Holdings is headquartered in Houston and New York, with additional offices in Chicago, Jersey City, London and Louisville. It is a leading independent interdealer broker in over the counter commodities and the largest liquidity provider to CME ClearPort and ICE Clear U.S. Through its subsidiaries the company holds a dominant market share in the U.S. and Canadian natural gas markets, the U.S. power markets, crude oil and crude oil options, crude oil products and crude oil product options, agricultural and soft commodities, as well as structured weather and emission derivatives. The company serves more than 250 institutional clients, including 45 members of the Fortune 500, and transacts at over 150 different commodity delivery points. To learn more about the company, please visit www.otcgh.com or go to http://bit.ly/OTCYouTube.

IMPORTANT NOTICE:  Trading of commodities and commodity futures and options, and other commodity derivatives has substantial risk of loss, and is not suitable or appropriate for all persons.  Past results are not necessarily indicative of future results.  The information in this piece is based on sources that are believed to be reliable, but it is not warranted to be accurate or complete, and no performance or results from use of the information are warranted.  This piece is not a solicitation or offer to purchase or sell commodities or commodity derivatives. Opinions expressed herein are subject to change without notice.