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CME: Corn Futures Closed Lower Thursday

13 January 2012

US - March Corn finished down 40 at 611 1/2, 48 off the high and equal to the low. May Corn closed down 40 at 618 1/4. This was equal to the low and 48 off the high.

March corn traded for just a few minutes this morning before locking down the 40 cent limit. The market stayed limit down for the first two hours of trade and then saw a 2 1/2 cent trading range near the mid-session. The USDA data was very negative for grain stocks and production data and this helped spark aggressive selling from speculators and producers early in the day.

Traders had been looking for bullish news so buyers have been active over the past week or more and the market lacked new buying interest on the early break. Traders noted that synthetic options traded down 3 1/2 cents more than the limit shortly after the opening. The USDA pegged ending stocks for the 2011/12 season at 846 million bushels which was down just two million from last month and well above trade expectations for a 100 million bushel decline.

Final production was pegged at 12.358 billion bushels, up 48 million bushels from their previous forecast while traders were expecting a drop of near 45 million bushels. Yield was 147.2 vs. 146.7 previous. Exports were revised higher by 50 million bushels. World ending stocks were pegged at 128.14 million tonnes from 127.19 million last month and trade expectations near 123.5 million tonnes. Argentina production was revised down by 3 million tonnes to 26 million and Brazil was left unchanged. December 1st corn stocks were pegged at 9.642 billion bushels which was up 250 million from trade expectations.

Weekly export sales for corn, came in at 321,500 metric tonnes for the current marketing year and cancellations of 23,000 for the next marketing year for a total of 298,500 tonnes which was well below trade expectations. Cumulative corn sales stand at 59.6 per cent of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 53.9 per cent. Sales of 493,000 metric tonnes are needed each week to reach the USDA forecast. March Rice finished down 0.23 at 14.57, 0.14 off the high and 0.12 up from the low.

Wheat Futures Closed Lower

March Wheat finished down 36 at 605, 43 3/4 off the high and 13 up from the low. July Wheat closed down 30 at 648. This was 15 3/4 up from the low and 37 off the high. March wheat closed sharply lower on the session as both wheat and corn data from the USDA was bearish enough to spark aggressive selling. The wheat data was bearish as US usage came in below trade expectations and wheat plantings for the 2012 crop came in well above trade expectations.

The USDA pegged total winter wheat planted acreage for 2012 at 41.947 million acres as compared with trade expectations for near 40.933 million. Hard red winter wheat acreage was up 662 million above trade expectations to over 30 million and soft red was up nearly 600 million above expectations at 8.37 million.

Ending stocks for the 2011/12 season were pegged at 870 million bushels as compared with trade expectations near 842 million. While exports were revised higher (as expected) feed usage was revised lower by 15 million bushels to 145 million which was bearish as traders expected a boost in wheat feeding. Wheat stocks as of December 1st were pegged at 1.656 billion bushels as compared with trade expectations at 1.695 billion. For the world report, 2011/12 ending stocks were pegged at 210.02 million tonnes, up more than 2 million from trade expectations.

Weekly export sales for wheat came in at 365,200 metric tonnes for the current marketing year and 73,000 for the next marketing year for a total of 438,200. Cumulative wheat sales stand at 77.2 per cent of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 75.2 per cent. Sales of 279,000 metric tonnes are needed each week to reach the USDA forecast. On top of the weekly sales, Algeria bought 300,000 tonnes of optional origin milling wheat.

Traders believe the origin is likely France or Argentina. The EU granted export licenses this week for 168,000 tonnes which pushed cumulative exports since the start of the 2011/12 season to 7.5 million tonnes as compared with 11.9 million last year at this time. March wheat is now down as much as 78 3/4 cents or 11.7 per cent from the 2012 peak. March Oats closed down 14 1/4 at 284 1/4. This was 5 3/4 up from the low and 16 1/2 off the high.

Soybean Futures Closed Lower

March Soybeans finished down 20 1/2 at 1182 1/2, 31 off the high and 32 1/2 up from the low. May Soybeans closed down 20 at 1192 1/2. This was 32 1/2 up from the low and 31 off the high. March Soymeal closed down 5.7 at 307.1. This was 10.7 up from the low and 8.2 off the high. March Soybean Oil finished down 0.43 at 51.46, 0.82 off the high and 1.18 up from the low. March soybeans were down 53 cents early in the session but managed to rally 32 1/2 cents off of the early lows into the mid-session.

The USDA data was mostly bearish across the board but especially for the corn market and a limit-down move in corn to start the day helped to drive soybeans sharply lower. The USDA pegged US soybean production at 3.056 billion bushels from 3.046 billion last month which was about as expected. Ending stocks, however, were pegged at 275 million bushels as compared with trade expectations looking for near 233 million. Exports were revised lower by 25 million and crush down by 10 million.

Without a serious drop in South America production, the USDA was in a position to drop usage and the increase in production and lower usage fell directly to the bottom line. World ending stocks for the 2011/12 season came in at 63.43 million tonnes as compared with 64.54 million last month. December 1st soybean stocks came in at 2.366 billion bushels, up 42 million from trade expectations. Weekly export sales for soybeans came in at 433,900 metric tonnes for the current marketing year and 300 for the next marketing year for a total of 434,200. Sales of 296,000 metric tonnes are needed each week to reach the USDA forecast.

Net meal sales came in at 47,600 tonnes which was below trade expectations and compares with sales of 99,000 tonnes needed each week to reach the USDA forecast. Net oil sales came in at just 1,100 metric tonnes which was also lower than expected. As of January 5th, cumulative soybean oil sales stand at 31.7 per cent of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 42.0 per cent. Sales of 10,000 metric tonnes are needed each week to reach the USDA forecast.

On top of the weekly sales, private exporters reported to the USDA export sales of 414,000 tonnes of US soybeans to unknown destination. The USDA news was negative but traders believe that the market would not be down as much as it was except for the outlook for improving weather in South America in another 8-9 days after heavy rains in the past few days. In addition, the limit-down move in corn has added to the negative tone. Traders will be closely monitoring weather forecasts in South America for direction Friday and early next week.


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