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CME: Corn Futures Finish Up

20 September 2012

US - December Corn finished up 16 1/2 at 756 1/2, 2 3/4 off the high and 17 up from the low. March Corn closed up 14 3/4 at 758 3/4. This was 15 up from the low and 2 3/4 off the high.

December corn traded sharply higher on the day and saw support from a stronger wheat market and on a weaker US Dollar. Higher than expected crude oil stocks were reported this morning which sent crude oil sharply lower but aggressive buying in corn largely offset the weakness in energy markets. Ethanol production for the week ending September 14th averaged 834,000 barrels per day which is up 2.2% vs. last week and down 4.3% vs. last year.

Total ethanol production for the week was 5.8 million barrels vs. 5.7 last week and was the highest in 11 weeks. Corn used in last week's production is estimated at 87.6 million bushels vs. 85.7 last week. Ethanol margins for Iowa processors remain negative which could be a limiting factor on gains in the short term. Cash bids in the Gulf of Mexico were steady on the day as US corn remains largely uncompetitive in the world market at the moment. Bids in the interior market were steady to weaker for some areas as harvest begins to expand and farmers deliver grain on existing sales.

November Rice finished up 0.175 at 15.12, equal to the high and 0.38 up from the low.

Soybean

November Soybeans finished up 29 1/2 at 1669 1/2, 6 1/4 off the high and 26 1/2 up from the low. January Soybeans closed up 30 at 1669 1/4. This was 28 up from the low and 4 3/4 off the high.

December Soymeal closed up 8.3 at 500.3. This was 7.4 up from the low and 4.7 off the high.

December Soybean Oil finished up 0.92 at 56.25, 0.05 off the high and 1.02 up from the low.

November soybeans traded sharply higher on the day but settled just off session highs. Soybean meal and oil were stronger as well. The cooler and wetter conditions in August may have benefited soybeans in growing regions of the northern and eastern Corn Belt but a large percentage of harvest remains and the market still expects to hear below average yields for some areas of Missouri, Kansas, and Illinois. Many in the trade also feel that despite the potential for a higher soybean yield, the increases in production could be offset due to an increase in domestic crush and export demand by China.

Rumors that China has bought soybean cargos on the price break this week have gone unconfirmed but Taiwan has released a tender for 60,000 tonnes of soybeans. Many traders feel that the support seen in the market today was end users taking coverage on the dip in prices. Soybean basis in the Gulf of Mexico was steady to firm and bull spreading in calendar spreads was noted which added to the underlying support in futures.

Wheat

December Wheat finished up 18 at 881 1/2, 1 1/2 off the high and 16 1/2 up from the low. March Wheat closed up 18 at 893 3/4. This was 16 1/2 up from the low and 1 1/2 off the high.

December Chicago wheat traded sharply higher into the close and settled near the highs of the day. Kansas City and Minneapolis wheat traded higher as well. The supportive trade for wheat was linked to short covering following the steep decline in prices since Monday and the lower US Dollar. Basis bids for wheat in the Gulf of Mexico were steady midday as US wheat prices remain at uncompetitive levels in the world export market. It was reported that Russia sold 150,000 tonnes of wheat to Iraq for November shipment.

Traders noted that prices continue to rise in Russia and that the volume sold in each tender is beginning to decline. Egypt's head wheat buyer released a statement saying Egypt's recent purchases of wheat since August have given them enough supply to last 7 months. Egypt is the world's largest importer of wheat so the prospects of lower demand could be negative to prices in the short term. Support in wheat continues to come from the fact Australia is trending drier than normal and many feel production could drop near 22 million tonnes vs. the current USDA forecast of 26 million tonnes. Recent rainfall has helped some growing areas, although weather patterns are expected dry out again after this week.

December Oats closed up 1 3/4 at 375 3/4. This was 4 3/4 up from the low and 1 3/4 off the high.


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