The increased domestic demand has driven the price of Chinese corn higher, both domestically and throughout Asia . Coupled with [Friday]'s report that China will issue no new export quotas beyond March 1, this is exceptionally good news for U.S. grain producers, who compete in those same international markets.

We pick those two for their exposure to the domestic market. We think the recovery in Asia is lifting demand and has re-established a floor under oil prices, and we don't expect prices to drop any time in the near term.

However, for hogs and poultry, the question is whether the increased price of corn will be offset by added value in the feed product that is returned. If not, this could mean some restructuring of the location of the U.S. and world animal industries. This appears to be particularly true for the eastern Corn Belt and the southeastern United States where hog, poultry and dairy are more dominant.

Fundamentally, the increase in exports and export sales has been a supportive factor. Ideas that ethanol-driven demand for corn will continue to increase at a brisk pace and that U.S. corn acreage may decline modestly in 2006 also provide fundamental support. Dry weather has driven wheat prices higher and has raised concerns about the 2006 growing season for corn and other crops. Speculative demand for corn and other crops has also escalated, as evidenced by the daily tally of the net position of the fund traders.

For North Asia, Korea is the prime candidate to see consumption-led demand in 2006, given the turnaround of domestic spending.

The Federal Reserve and the Treasury are carefully monitoring the situation in Hong Kong and throughout Asia, ... They have been in close contact with their counterparts in the region.