CME: Corn Futures Closed Higher Wednesday

26 January 2012

US - March Corn finished up 4 1/4 at 634 1/2, 3 1/2 off the high and 9 up from the low. May Corn closed up 5 at 640 1/4. This was 8 3/4 up from the low and 2 3/4 off the high.

March corn opened 1 1/4 cents higher on the session at 631 1/2 and experienced an early range of 625 1/2 to 635 3/4. The market inched higher early in the session but talk that the surge in cash prices has sparked some increased producer selling and talk that recent weather in Argentina may have stabilized crop conditions helped to spark the sell-off early in the day.

The market managed to close higher on the day even after gulf basis slipped 2 cents on talk of better farmer selling. The Argentina Ag Minister believes that corn exports will still total near 15.4 million tonnes this season even with the lower crop. The USDA had projected 18.5 million in the last USDA monthly update.

If the US gets all of the "extra" business left over from Argentina, US exports will need to be revised higher by 3.1 million tonnes or 122 million bushels.

The current USDA ending stocks estimate for the 2011/12 season is just 846 million bushels. Traders also see the possibility of near 50-100 million bushels more corn usage for ethanol and a similar amount for livestock feeding. Higher usage would just cut into the already tight ending stocks projection.

Ethanol production for the week ending January 20th averaged 934,000 barrels per day. This is down 0.74% vs. last week and up 1.3% vs. last year.

Total Ethanol production for the week was 6.538 million barrels. Corn used in last week's production is estimated at 99.49 million bushels as compared with the weekly average pace of 94.9 million bushels necessary per week to meet this crop year's USDA estimate. Stocks were 19.8 million barrels which was up 1.4% vs. last week and up 4% vs. last year.

For weekly export sales in the morning, traders are looking for sales near 575,000 tonnes as compared with 759,900 tonnes last week. March Rice finished down 0.025 at 14.59, 0.1 off the high and 0.01 up from the low.

Wheat Futures Closed Higher

March Wheat finished up 7 3/4 at 641 1/4, 8 1/2 off the high and 11 3/4 up from the low. July Wheat closed up 5 at 671 1/4. This was 11 3/4 up from the low and 5 3/4 off the high. March wheat surged higher in early trade following renewed fears that Russia could curb exports beginning in April plus continued talk that US wheat is competitive on the world market.

This sparked another round of short-covering early in the session today. However, even after the Fed committee minutes were released and the dollar fell sharply and gold pushed to the high end of a $50 range, the market chopped around in a fairly tight range to close moderately higher on the day.

In other words, the turn higher in outside market forces failed to attract much in the way of new support. The early rally pushed the March contract to the highest level since January 5th. The sharp rise on open interest in recent week's plus the record net short position from funds in the last COT report has traders believing that short-covering is part of the recent strength.

Since the January 3rd peak, open interest is up 78,462 contracts. For weekly export sales in the morning, traders are looking for sales near 350,000 tonnes as compared with 587,200 tonnes last week. March Oats closed up 3 3/4 at 298 1/4. This was 3 1/2 up from the low and 1 3/4 off the high.

Soybean Futures Closed Lower

March Soybeans finished down 6 1/2 at 1213 1/2, 12 3/4 off the high and 5 up from the low. May Soybeans closed down 6 at 1222 3/4. This was 4 3/4 up from the low and 12 1/4 off the high. March Soymeal closed down 2.4 at 321.1. This was 1.3 up from the low and 4.8 off the high. March Soybean Oil finished up 0.04 at 51.39, 0.13 off the high and 0.29 up from the low.

March soybeans closed lower on the session in fairly quiet trade with a lack of market-moving news keeping trade choppy. The market pushed higher on the day shortly after the Fed Reserve announcement which drove the US dollar lower and gold and other commodity markets higher. However, the buying fizzled out and the market pushed back lower on the day into the close.

Ideas that the recent rains in Argentina and Brazil could boost crop conditions plus speculative long liquidation selling helped to pressure the market early in the day. A bounce in wheat and corn helped to provide some support. A negative tilt to outside markets with a firm US dollar and weakness in gold helped to pressure the market early.

Ideas that the weather has helped to stabilize South America production losses and that some areas may be improving after recent rains helped to pressure. Support from yesterday's lows held and the market experienced an inside trading day. For weekly export sales in the morning, traders are looking for sales near 675,000 tonnes as compared with 991,100 tonnes last week.