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CME: Corn Futures Closed Higher Wednesday

17 January 2013

US - March Corn finished up 3/4 at 731 1/4, 3 3/4 off the high and 6 3/4 up from the low. May Corn closed up 1/2 at 731 1/4. This was 6 1/4 up from the low and 3 3/4 off the high.

March corn traded lower for most of the day but managed to close higher into the closing bell led by a sharply higher soybean market.

Light profit taking was seen early on following 8 straight sessions of higher trade. Non-existent export demand and poor ethanol data continue to suggest that at least some kind of demand rationing has taken place due to the higher corn prices this year.

Ethanol production for the week ending January 11th averaged 784,000 barrels per day, down 5 per cent vs. last week and down 16.7 per cent vs. last year.

Corn used in last week's production is estimated at 82.3 million bushels, down from 86.7 the week prior and the lowest weekly usage for the 2012/13 marketing year.

Corn use needs to average 86.8 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of January 11th were 20.4 million barrels, up 2.6 per cent vs. last week and up 4.2 per cent vs. last year.

Implied demand, total supply net of the weekly change in stocks, fell to its lowest level in 5 weeks at 5.17 million barrels. The data was considered negative to the price outlook and suggests a slowdown in ethanol demand.

Soy Futures Closed Higher

January Soybeans finished up 25 at 1438 1/2, 1/2 off the high and 26 1/4 up from the low. November Soybeans closed up 13 3/4 at 1297. This was 17 up from the low and 3 off the high.

January Soymeal closed up 7.2 at 419.1. This was 8.4 up from the low and -7.2 off the high.

January Soybean Oil finished up 0.44 at 51.31, 0.19 off the high and 0.63 up from the low.

March soybeans traded sharply higher on the day on support from a stronger meal market and oil saw gains as well. Thoughts that China has secured additional cargos this week helped to support along with a drier forecast for Argentina and Southern Brazil.

Northern Brazil continues to see beneficial rainfall but scattered showers in Mato Grosso could delay harvest activity this week.

The CIF basis was steady midday on the jump in futures but interior basis levels remain historically high as traders attempt to drum up cash grain movement in the country. Crush margins remain positive but have contracted modestly due to the firm basis levels.

The tight domestic supply outlook and strong pace of demand continues to favor the bulls but some suggest that the possible bumper crop in South America along with a shift in demand to the Southern Hemisphere could limit gains as we move into February and March.

Wheat Futures Closed Higher

March Wheat finished up 2 1/4 at 785, 6 off the high and 8 up from the low. May Wheat closed up 2 3/4 at 793 3/4. This was 7 3/4 up from the low and 5 1/4 off the high.

KC and Chicago wheat traded lower early in the session but managed to close higher on the day. Kansas City wheat led the way higher on concern over the dry conditions in the west.

Short covering was noted in each market which helped to support the move higher. Export demand continues to be unimpressive for wheat and it was reported this morning that France likely sold as much as 400,000 tonnes of milling wheat to Algeria overnight for May/April shipment.

Most expected the US to do the business but it seems other origins around the world are comfortable with their domestic supply outlook to sell additional cargos for export. This could add long term resistance to the price outlook in wheat.

The tight corn supply this year suggests better feed wheat demand which may pick up some of the slack from missed export opportunities. Additional support continues to come from the drier weather outlook in the western plains for the next 10-14 days.

March Oats closed up 3/4 at 357 1/4. This was 4 up from the low and 2 3/4 off the high.

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