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CME: Corn Finished Up on Tuesday

11 September 2013

US - December Corn finished up 5 1/2 at 469, 1/2 off the high and 8 1/4 up from the low. March Corn closed up 5 1/4 at 481 3/4. This was 7 3/4 up from the low and 3/4 off the high.

Corn futures probed higher throughout the session as short position holders even up their books and head to the sidelines ahead of the USDA report on Thursday. December corn edged up to the high end of the weekly range but found strong selling resistance near 469 which has proven to be a tough spot to breakthrough since last Thursday. The market is expecting a decline in the US yield and production although supply continues to lean bearish in 13/14 while demand expansion remains in question.

The second corn crop in Mato Grosso, Brazil is just beginning to hit the world market and the Brazilian government agency CONAB raised their forecast for 2012/13 production to a record 81.3 million tonnes, up from 80.3 last month. Brazilian weather has been rather dry in the last month but this is their dry season and moisture generally begins picking up into the 4th quarter.

There has been talk recently that China is considering approving GMO corn strains out of Brazil and China has already been an importer of Ukrainian and Argentinian corn this year. Wires reported this morning that China feed mill purchases of US sorghum may top 1 million tonnes in 13/14 after using up their annual import allocations for corn. Domestic corn in China is more expensive than US sorghum imports. Mills have already bought 800,000 tonnes for 13/14. The US weather forecast leans favorable for harvest as combines begin rolling in central IL and parts of IN. Basis levels continue to erode with noted weakness in Ohio today as commercials prepare for long truck lines and a surge in country grain movement in the weeks ahead. New crop spreads edged higher today, but only by a modest degree.

November Rice finished up 0.095 at 15.435, equal to the high and 0.155 up from the low.

Soybeans

November Soybeans finished down 1 1/2 at 1355, 8 1/4 off the high and 14 3/4 up from the low. January Soybeans closed down 1/2 at 1355 1/4. This was 15 1/4 up from the low and 7 off the high.

December Soymeal closed down 1.3 at 425.2. This was 5.0 up from the low and 4.8 off the high.

December Soybean Oil finished down 0.1 at 43.07, 0.48 off the high and 0.28 up from the low.

Soybean futures edged lower midday after the crop conditions report came in slightly better than expectations although with 30% of the IA crop rated poor/very poor, many believe it's tough being too optimistic on production in some top production states. November soybeans were able to trade both sides of the unchanged but upside gains were limited as the USDA report draws closer.

Weather leans bullish with little to no rainfall across IA, IL, WI, or IN over the next 5 days. High heat was prominent across this region yesterday and continues today with some temps as high as 100 degrees. CIF basis weakness in the spot market helped to pressure the September contract early on but bids began to stabilize midday which lifted the Sept/November spread. Bearish technical traders are still looking for a fill of the gap in the November soybean chart from August 23rd. World production continues to lean bearish but this is a long tail supply dynamic which will take time to develop. The sharp premium soybeans hold to corn has increased planted acreage in Brazil with many looking for record production in 2013/14. The Brazilian government agency CONAB held their 2012/13 production forecast steady at 81.5 million tonnes. Demand remains strong with relentless buying from China and the USDA announced that US private exporters sold another 120,000 tonnes to China for 2013/14 crop year overnight.

Wheat

December Wheat finished up 5 1/4 at 646 1/2, 1 3/4 off the high and 6 1/2 up from the low. March Wheat closed up 4 1/4 at 657 3/4. This was 6 1/4 up from the low and 2 off the high.

Wheat futures led the grains higher today with the Chicago December posting an inside day and the KC December managed to hold the new contract low that was posted overnight. Wheat extended its premium to corn today after setting back yesterday in a corrective move. Paris wheat futures ended the day lower on healthy crop production forecasts and stiff competition from the Black Sea for exports. Frances farm ministry estimated the French soft wheat crop at 37 million tonnes, up from 36.1 last month and up 4.1% from a year ago. While the supply side of the French market leans bearish, questions still loom as to if France can ship more than the 9.9 million tonnes shipped outside the EU in 2012/13 since the Black Sea continues to sell Egypt and other countries at cheaper levels.

Traders in France indicate that export shipments outside the EU could reach 12 million tonnes in 2013/14 but new destinations will need to be achieved. Countervailing the bearish soft wheat supply sentiment that seems to be spreading on a global basis is a slightly bullish higher protein, milling wheat market dynamic. Brazil imports continue to surge and the Brazilian government agency CONAB cut their forecast for the 13/14 wheat crop by 11.9% to 4.95 million tonnes. Early frost to the southern production state of Parana was the primary reason for the revision lower. Argentina production looks healthy for 2013/14 but without a significant rebound in production, imports to Brazil could still be looked upon as beneficial as domestic food inflation surges. The Brazilian Real has been appreciating against the US Dollar over the last couple of weeks which will help keep interest rates high and could stabilize inflation levels as well. Egypt ended up buying 235,000 tonnes of Black Sea wheat in their tender with 115,000 coming from Ukraine and 60,000 tonnes from Romania and Russia each. Purchases were made between $251 to $255 per tonne, in line with bookings over the last 2 weeks. Iraq issued a new million wheat tender for 50,000 tonnes but historically they buy more than the stated amount.

December Oats closed up 5 at 318 3/4. This was 8 3/4 up from the low and 1/4 off the high.

TheCropSite News Desk



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