CME: Corn Futures Closed Down on Tuesday

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CME: Corn Futures Closed Down on Tuesday

11 April 2012

US - May Corn finished down on Tuesday in the latest CME report.

Corn

May Corn finished down 14 1/4 at 634 3/4, 19 off the high and 1/4 up from the low. July Corn closed down 15 1/2 at 625 3/4. This was 1/2 up from the low and 19 1/2 off the high. May corn managed a rally to a few cents higher on the day early in the session but closed sharply lower on the day and the market has now given back near 50% of the gains from the bullish stocks and acreage reports from late March. Fund trader long liquidation selling was noted; especially late in the session after the outside market forces turned bearish. Buyers emerged shortly after the opening to support a rally to higher on the day led by strength in soybeans but the market drifted back lower and pushed into new lows for the day into the mid-session.

The USDA pegged ending stocks for the 2011/12 season at 801 million bushels which was unchanged from last month and about 70-80 million bushels above trade expectations. Usage numbers were left unchanged on the month. With the smaller than expected March 1st stocks, traders had expected some adjustments higher in demand. The USDA did mention better wheat feeding into the summer and also believe that feed usage for the season will decline for old crop corn because new crop corn will be available in August. World ending stocks were pegged at 122.7 million tonnes from 124.5 last month and 125.02 million tonnes last year. This is a world stocks/usage level of 14.1% which is the lowest since 11.7% for the 1073/74 crop season. Beginning stocks were revised lower due to a 4 million tonne adjustment down in China. Brazil production was left unchanged at 62 million and Argentina production was lowered by just 500,000 tonnes to 21.5 million.

The Brazil official crop estimate was also released this morning (CONAB) and came in at 65.1 million tonnes as they are likely looking for a much better second summer crop outlook. This news was seen as negative. The record fast planting pace and the outlook for Midwest rain for the next week with warming weather plus a bearish tilt to outside market forces helped to pressure. The May/July corn spread continued to tighten in spite of the sell-off but the July/Dec spread fell sharply. May Rice finished down 0.01 at 14.865, 0.035 off the high and 0.155 up from the low.

Soybean

May Soybeans finished down 5 at 1426, 26 1/4 off the high and 4 1/4 up from the low. July Soybeans closed down 7 1/2 at 1427 1/4. This was 3 3/4 up from the low and 26 off the high. May Soymeal closed up 1 at 389.8. This was 4.2 up from the low and 6.8 off the high. May Soybean Oil finished up 0.26 at 56.97, 0.48 off the high and 0.26 up from the low. A new high for the move and lower close with an outside-day down could be seen as a technical sign of a near-term top. Traders see the market as extremely overbought basis traditional technical indicators and both meal and soybeans showed a record high net long position from fund traders in the last COT report. The early rally pushed the market to the highest level since September 2nd. The tightening old crop ending stocks situation and concerns that the market will need record high yields and a jump in planted area just to avoid extreme tightness for the new crop season continues to support.

On top of the USDA monthly update, private exporters reported a sale of 165,000 tonnes of US soybeans to China for the 2012/13 season. The USDA pegged US soybean ending stocks at 250 million bushels which was down 25 million from last month but about 10 million higher than expected. The US demand numbers were revised higher. World ending stocks for the 2011/12 season came in at 55.52 million tonnes which down from 57.3 million last month and down from 69.12 million last year. Brazil production came in at 66 millions, down from 68.5 million last month and down about 1 million tonnes from trade expectations. The Brazil official crop estimate was also released this morning (CONAB) at just 65.6 million tonnes and this news was seen as supportive. The USDA revised Argentina production down to 45 million from 46.5 million last month. China customs data reported March soybean imports at 4.83 million tonnes.

Outside market forces turned more negative into the mid-session with a sharp break in the US stock market and a bounce in the US dollar and long liquidation emerged to pressure the market late in the day. Soybean oil managed to close higher on the session and pushed to the highest level since September 15th. Ending stocks were revised lower in the US due to expanding bio-diesel usage and palm oil stocks are declining and the vegetable oil markets remain supported by the sharp drop in South America oilseed production.

Wheat

May Wheat finished down 17 1/4 at 625 3/4, 27 1/2 off the high and 1 3/4 up from the low. July Wheat closed down 17 at 632. This was 2 up from the low and 26 off the high. Improving crop weather for the US and Europe and a fast start to the spring wheat season plus a bearish trend from outside market forces and weakness in the other grains helped to drive the market lower to close sharply lower on the day. A turn up in the soybean market helped to offset a more negative tilt to outside market forces to support a moderate rally into the mid-session and a new 3-day high. However, a continued trend higher in the US dollar and a collapse to trade near 190 lower for the Dow helped to spark an aggressive selling trend during the second half of the session and the weak close.

July Kansas City wheat closed 19 1/2 cents lower to the lowest close since July of 2010. The USDA pegged US ending stocks at 793 million bushels as compared with 825 million last month due to a revision higher of 35 million for feed usage.

World ending stocks came in at 206.27 million tonnes from 209.58 last month and from a record high of 213.1 million just a few months ago. China feed usage was revised higher by 2 million tonnes to help lower the stocks numbers. The weekly Winter Wheat Conditions report showed that 61% of the crop is now rated good/excellent compared to 58% last week and 36% last year. The weekly Spring Wheat Planting report showed that 21% of the crop is planted compared to 8% last week and 3% last year. The 10 year average for this time of year is 5%. The previous highest percent complete was 14% in 1992 so the pace this season is clearly a new record. North Dakota is 17% planted vs. 1% on average and South Dakota is 52% complete vs. 6% as the 5-year average. Algeria bought at least 125,000 tonnes of durum wheat and Jordan is tendering to buy 100,000 tonnes of hard wheat. May Oats closed down 5 1/4 at 333. This was 1/2 up from the low and 8 off the high.