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CME: Corn Futures Closed Higher Friday

02 September 2013

US - December Corn finished up 1/2 at 482, 2 off the high and 5 3/4 up from the low. March Corn closed up 1/4 at 494 1/2. This was 5 1/2 up from the low and 2 1/4 off the high.

Corn futures traded lower for most of the session but near the range seen in yesterday's trade. Traders noted positioning ahead of the weekend with the potential for increased rainfall across areas of the Eastern Corn Belt by Sunday as reasons for the slide lower.

The afternoon radar was fairly quiet around the Midwest so harvest was moving along at a brisk pace in the southeast, delta, and even areas of the southern Midwest.

Parts of MO will pick up the pace in the next week and IL will begin to really get going by the 2nd week of September. Basis values are beginning to soften in these regions as fresh supply comes to market and deliveries are made to the local terminals and elevators.

Soft cash markets are considered a negative influence on the futures market and new crop spreads. The December 2013 vs. December 2014 and July 2014 vs. December 2014 was weaker today and added to their carries.

Ethanol margins remain strong across the Midwest but production has backed off significantly in the last quarter. As of August 23rd, corn usage per week for production was nearly 100 million bushels less than the needed usage per week to hit the USDA forecast of 4.65 billion bushels.

The USDA is estimating ethanol demand for 2013/14 at 4.9 billion bushels. With only about 2 weeks left in the marketing year, it's likely the USDA revises old crop demand lower which could increase the carry-in for the new crop year.

This will leave the market with a tall order in attaining the new crop ethanol demand forecast but production should begin to edge higher as new crop arrives and facilities ramp up production following maintenance.

November Rice finished up 0.02 at 15.75, equal to the high and 0.05 up from the low.

Soy Futures Closed Lower

November Soybeans finished down 11 at 1357 1/2, 13 off the high and 11 1/2 up from the low. January Soybeans closed down 10 at 1354 3/4. This was 11 1/4 up from the low and 11 3/4 off the high.

December Soymeal closed down 6.4 at 423.7. This was 1.8 up from the low and 6.3 off the high.

December Soybean Oil finished up 0.09 at 44.29, 0.08 off the high and 0.61 up from the low.

The soybean market brushed aside the lack of rainfall and high heat today, which has likely taken a toll on crops, and traded lower for most of the session.

Funds are long the market and after extensive gains in the last two weeks, traders are worried that the forecast could shift wetter over the weekend and into early next week. Traders noted profit taking ahead of the weekend.

The forecast is unchanged from yesterday with parts of IL, IN, and OH expected to see the best rainfall by Monday. IA, MO, and most of MN look dry with a chance of a quarter inch or less.

Heat will back off next week which will stabilize some areas that saw rainfall but the Corn Belt needs a complete soaking before the overall supply potential improves.

This is not in the short term forecast at the moment. The damage has already been done to a large portion of the crop with most analysts trimmed yield potential by 1-1.2 bushels per acre, nationally.

Demand remains as strong as ever with China booking another 110,000 tonnes of US soybeans this morning for the 2013/14 marketing year.

Sales remain well above the 5 year average pace and well above the pace needed to hit the USDA estimate. The bears saw momentum to the downside on technical selling and a stronger US Dollar.

Wheat Futures Closed Lower

December Wheat finished down 1/4 at 654, 4 3/4 off the high and 3 3/4 up from the low. March Wheat closed down 1/4 at 665 1/2. This was 3 3/4 up from the low and 4 1/2 off the high.

Wheat futures traded both sides of the unchanged today despite the weaker action in the corn market. Wheat vs. corn spreads worked to the upside as traders become more bearish towards corn as harvest moves north from the delta.

The basis in KS was steady midday but a tad weaker in Kansas City yesterday for mid-12 proteins. Export demand remains strong out of Brazil but feed demand should begin to wither away over the next 1-2 months as new crop corn begins to enter the demand channels in NE, KS, OK, and TX. A commodity group dropping their production outlook for Australia overnight by 2.5 million tonnes citing dry conditions in key growing regions.

The USDA is estimating production for 2013/14 at 25.5 million tonnes. Export prices rose in Australia this week and last due to light farmer selling and dryness concerns. Many traders see Chinese demand picking up soon. The US Dollar was higher today which added some negative sentiment to the physical commodity markets.

December Oats closed down 7 at 340 1/2. This was 2 1/2 up from the low and 4 1/2 off the high.


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