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CME: Corn Futures Closed Unchanged Wednesday

05 January 2012

US - March Corn finished unchanged at 658 1/2, 3 1/4 off the high and 5 up from the low. May Corn closed down 1/4 at 666 3/4. This was 4 3/4 up from the low and 3 3/4 off the high. March corn closed unchanged on the session after choppy and two-sided trade.

The market saw some early weakness based on outside market forces but as the stock market, energy markets and metal markets recovered, the market managed to hold support and bounce back up to near unchanged on the day.

Weakness in the Euro currency and some financial uncertainties plus talk of the overbought condition of the market helped to spark some weakness in corn after a higher opening as fund traders were noted as sellers. Fund re-balancing, increased producer selling and some increased Argentina rain coverage for next week were seen as negative forces today.

Romania corn production for 2011 came in near 11.4 million tonnes, up 26 per cent from last year and the largest crop since 2004. Hot and dry weather this week in Argentina helped to provide underlying support with talk of permanent yield damage due to stress during pollination.

A weaker cash basis market helped to pressure the market as well; suggesting that producer selling is picking up in the new tax year. March Rice finished up 0.005 at 14.65, equal to the high and 0.19 up from the low.

Wheat Futures Closed Lower

March Wheat finished down 7 at 650, 13 off the high and 4 3/4 up from the low. July Wheat closed down 7 3/4 at 684. This was 4 3/4 up from the low and 14 off the high. March wheat closed 7 cents lower on the session and is already down as much as 25 1/2 cents from yesterday's highs. A strong US dollar and choppy trade in the other grains helped to pressure.

Early weakness in energy and equity markets added to the negative tone but as outside markets recovered, wheat did not. Talk of the overbought condition of the market plus talk of the weak technical action in Kansas City yesterday helped to pressure the market early.

In addition, news of improving crop conditions for the winter wheat crop and ideas that planted area may have expanded this season helped to pressure. Kansas crops at the end of December were rated 53 per cent in good to excellent condition as compared with 47 per cent last month.

Oklahoma was 63 per cent good to excellent as compared with 56 per cent last month and Texas was 25 per cent good/excellent which was unchanged from last month. Romania wheat production for 2011 came in near 7.2 million tonnes, up 24 per cent and the largest in six years. March Oats closed down 5 1/2 at 293. This was 2 3/4 up from the low and 8 off the high.

Soy Futures Closed Higher

March Soybeans finished up 2 1/2 at 1230, 5 3/4 off the high and 9 1/2 up from the low. May Soybeans closed up 2 1/4 at 1239 1/2. This was 8 3/4 up from the low and 5 3/4 off the high. March Soymeal closed up 1.4 at 320.6.

This was 4.6 up from the low and 0.4 off the high. March Soybean Oil finished down 0.08 at 53.03, 0.23 off the high and 0.32 up from the low. March soybeans closed slightly higher on the session after choppy and two-sided trade. Meal closed higher and near the highs while soybean oil closed lower on the day.

Some forecast for better rain coverage for the Argentina January 10th-11th rain event plus a slightly negative tilt for outside market forces helped to trigger the early weakness today.

A stronger US dollar and weakness in equity and energy prices helped to pressure. However, minor support held on the early set-back as traders believe that a continued dry weather trend for Argentina is causing increased stress and this supported higher trade into the mid-session.

A large brokerage firm cut their production forecasts for Argentina due to recent hot and dry weather. Soybean production was cut 3 million tonnes and corn harvest potential is down 5-7 million tonnes.

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