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CME: Corn Futures Closed Sharply Higher Thursday

28 October 2011

US - December corn closed sharply higher on the session and to the highest close since September 21st.

December Corn finished up 14 1/4 at 651 1/2, 6 off the high and 13 3/4 up from the low. March Corn closed up 14 at 663 1/2. This was 13 1/2 up from the low and 5 3/4 off the high.

The market saw strong gains early in the session led by bullish outside market forces but continued demand concerns emerged to see a set-back into the mid-session with the market trading just slightly higher on the day. However, a continue push to new highs for the stock market, new lows for the dollar and new lows for government bonds left a more inflationary tilt to trade later in the day.

Ideas that the break yesterday may have been overdone helped to support the market as well.

Weekly export sales came in at just 336,200 metric tonnes for the current marketing year and 25,100 for the next marketing year for a total of 361,300. This was far less than expected and compares with the previous three week average of 1.44 million tonnes.

Cumulative corn sales stand at 50.4% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 35.7%. Sales of 445,000 metric tonnes are needed each week to reach the USDA forecast.

The International Grain Council raised their global production estimate by a whopping 10 million tonnes to 855 million.

Wheat Futures Closed Sharply Higher

December Wheat finished up 24 1/2 at 644, 3 3/4 off the high and 24 1/2 up from the low. March Wheat closed up 23 1/2 at 679 3/4. This was 22 3/4 up from the low and 2 1/4 off the high.

December wheat closed sharply higher on the session and to the highest close since October 11th.

The surge down in the US dollar to the lowest level since early September helped to provide solid support and short-covering early in the day but the failure to take out yesterday's highs and weak export news helped to spark the set-back off of the early highs into the mid-session. However, funds were noted as steady buyers and all of the grain markets pushed to new highs for the day late in the session.

Net weekly export sales for wheat came in at 316,800 metric tonnes which was near the low end of expectations. Sales of 332,000 metric tonnes are needed each week to reach the USDA forecast.

The European Union granted export licenses for 163,000 tonnes of wheat for the week which pushed cumulative exports for the season (starting in July) to 4.5 million tonnes as compared with 8.1 million exported by this time last season. Keep in mind; FSU-12 exports for the 2011/12 season are projected at 34.7 million tonnes from 14.1 million last year.

The International Grain Council raised their global production estimate by 5 million tonnes to 684 million.

July Kansas City wheat saw the highest close since September 27th.

Soybean Futures Closed Sharply Higher

November Soybeans finished up 24 1/2 at 1235, 8 off the high and 24 1/2 up from the low. January Soybeans closed up 24 1/4 at 1244. This was 24 1/2 up from the low and 8 1/2 off the high.

December Soymeal closed up 6.5 at 323.5. This was 6.0 up from the low and 1.3 off the high.

December Soybean Oil finished up 1.22 at 52.11, 0.39 off the high and 1.16 up from the low.

Bullish outside market influences more than offset weak demand news to support a sharply higher trade today.

Weak export sales news this morning, talk that Brazil is still exporting soybeans to China and news that "eggs set" were down 8% from last year for the week were all considered negative demand news but European leaders avoided a meltdown in Europe and this was seen as the over-riding bullish force for the day.

Ideas that the European leaders have a package to ease debt crisis concerns helped to spark an aggressive move by investors around the world to move money into equity and commodity markets as the "global growth" scenario is now back in favor with money managers.

A collapse in the US dollar against major currencies ignited some inflationary concerns as well and ideas that the sharp break from yesterday was overdone helped to support the soybean complex.

A surge in energy markets added to the positive tone.

Weak export sales and good weather in South America were factors which might have limited the advance. Weekly export sales for soybeans came in at just 227,600 metric tonnes for the current marketing year and 27,000 for the next marketing year for a total of 254,600 which was well below trade expectations.

As of October 20th, cumulative soybean sales stand at 48.9% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 51.3%. Sales of 422,000 metric tonnes are needed each week to reach the USDA forecast.

Meal sales came in at just 74,100 metric tonnes which was also well below expectations. Sales of 104,000 metric tonnes are needed each week to reach the USDA forecast.

Net oil sales came in at 4,200 metric tonnes as compared with sales of 15,000 tonnes needed each week to reach the USDA forecast.


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