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CME: Corn Futures Closed Lower Tuesday

04 September 2013

US - December Corn finished down 6 3/4 at 475 1/4, 18 1/2 off the high and 5 up from the low. March Corn closed down 6 1/2 at 488. This was 6 up from the low and 18 off the high.

Corn futures surged to the upside overnight on the heels of a supportive weather forecast for the soybean market but the upside action didn't last long and Dec corn reversed lower to finish the session in the red.

With harvest edging into the southern Midwest, new crop rallies may become more difficult to sustain.

The market is expecting crop conditions to decline by 2-3% in this afternoon's Crop Conditions report.

The Sept/Dec spread edged higher today while new crop spreads pushed out their carries. The September contract finished in the green on strong commercial buying as cash markets remain historically firm across the Corn Belt.

Traders did note weakness from the west to the east since last Friday. Bids in Blair, NE fell to 95 over the December, down from 145 over the September last week. Bids in Decatur, IL were quoted at the lowest level since early July.

As harvest moves forward, additional weakness is expected although once the surge of new crop supply hits the market, additional sales are unlikely at current price levels and cash markets may stabilize.

Export inspections were slightly supportive to the old crop market with shipments for the week ending August 29th estimated at 17.4 million bushels, up from 12 million a week ago.

The cumulative shipment pace is estimated at 97.3% of the USDA forecast vs. the 5 year average of 96%.

November Rice finished up 0.04 at 15.79, 0.05 off the high and 0.04 up from the low.

Soy Futures Closed Higher

November Soybeans finished up 29 1/4 at 1386 3/4, 21 3/4 off the high and 8 1/4 up from the low. January Soybeans closed up 30 1/4 at 1385. This was 10 up from the low and 18 1/2 off the high.

December Soymeal closed up 15.2 at 438.9. This was 5.1 up from the low and 4.8 off the high.

December Soybean Oil finished down 0.1 at 44.19, 0.91 off the high and 0.37 up from the low.

Soybean futures traded sharply higher on the day but finished well off session highs. The November contract surged to 1408 1/2 this morning but found strong hedger and spec selling resistance above 14.

New crop spreads were well supported all day which lent support to the futures market. The weather remains the driving force behind the supportive market action with less than expected rainfall coverage over the weekend and a drier outlook for the rest of this week.

There is a chance for another round of showers for scattered production regions by early next week but temperatures are also expected to increase day by day.

The trade is looking for crop conditions to decline by another 4-5% in this afternoon's Crop Conditions report.

Export inspections were negative for the old crop price direction with shipments totaling just 1.4 million bushels, down from 2.5 million a week ago and compared to 6.7 million needed to ship each week to hit the USDA forecast.

The cumulative shipment pace is estimated at 99.8% of the USDA export estimate vs. the 5 year average of 98%.

This was the last reporting week for the 2012/13 crop year. While the data certainly suggests export demand has come to a halt for old crop, new crop export demand remains highly supportive as China continues to be a relentless buyer ahead of the new crop year.

Increased planted acreage for 2013/14 in Brazil will help to take over some of the export demand burden from the US which might be needed given the questionable supply outlook.

Wheat Futures Closed Lower

December Wheat finished down 6 3/4 at 647 1/4, 16 3/4 off the high and 2 1/4 up from the low. March Wheat closed down 6 3/4 at 658 3/4. This was 2 1/2 up from the low and 16 3/4 off the high.

The overnight session saw mostly higher trade for corn, soybeans, and wheat but by midday, corn futures reversed lower and this stalled any hope of a wheat rally.

Wheat vs. corn spreads edged higher as the market becomes more certain that the US will have a healthy supply of corn in 2013/14. Some traders see the premium wheat holds to corn moving higher in the months ahead as a way to discourage feed usage in the last quarter of 2013 and early 2014.

Wheat ending stocks in KC and Chicago are sitting at 6 year lows while export demand remains strong. Rationing in the feed usage area is likely needed to keep stocks from deteriorating to extremely tight levels.

Export inspections were supportive to the market with 36.4 million bushels shipped, up from 31.2 million the week prior. Shipments needed per week to hit the USDA export forecast are 19.3 million, nearly unchanged from last week. The cumulative shipment pace is 31% of the USDA forecast vs. the 5 year average of 25.5%.

Traders are also keeping an eye on the supply and demand situation in South America as below normal temperatures continues to increase the risk of winterkill in southern growing regions.

Brazil import demand remains strong with some projecting total imports by Brazil at 3-4 million tonnes. Most of which will be from the KC or even possibly the Minneapolis spring wheat market.

December Oats closed down 10 1/2 at 330. This was 3 1/2 up from the low and 14 3/4 off the high.

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