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CME: Corn Futures Closed Higher Tuesday

21 November 2012

US - December Corn finished up 4 1/2 at 743 1/4, 4 off the high and 9 up from the low. March Corn closed up 4 3/4 at 747 1/4. This was 9 1/4 up from the low and 3 3/4 off the high.

December corn traded sharply higher on the day and support was linked to a stronger wheat market and prospects for better export demand going forward.

Many traders believe a revival in export growth is just around the corner which could spur on considerable price appreciation long term due to tight domestic supplies. Too offset, importers like Japan have increased their use of feed wheat this year and corn used in feed fell for the 9th month in a row in September.

The ratio of corn in animal feed production fell to 42.5 per cent in September vs. 42.7 per cent in August and this is against 44.5 per cent for the same month last year.

Basis for corn in the Gulf of Mexico was steady on the day but basis has firmed over the last week as traders attempt to drum up cash grain movement in the country.

Fears that a portion of the Mississippi River may shut down in early December has also added to the stronger cash market tone. Additional support was found as some private analysts are beginning to slash Argentina's corn production estimate near 22.50 to 23 million tonnes vs. the current USDA estimate of 28 million tonnes.

Excessive rainfall has delayed corn planting in Argentina this year and the forecast calls for additional rainfall tonight and Wednesday.

January Rice finished up 0.08 at 14.925, equal to the high and equal to the low.

Soy Futures Closed Higher

January Soybeans finished up 18 at 1412 3/4, 3 1/4 off the high and 32 up from the low. March Soybeans closed up 14 1/4 at 1396 1/4. This was 30 1/4 up from the low and 2 3/4 off the high.

December Soymeal closed up 5 at 429.6. This was 9.5 up from the low and 1.6 off the high.

December Soybean Oil finished up 0.43 at 48.32, 0.11 off the high and 0.69 up from the low.

January soybeans saw double digit gains today on thoughts that the complex was slightly oversold which triggered a round of short covering shortly after pit trading began. Firm cash markets and strong export demand helped to support the sharp move higher.

Argentina and Brazil soybean production was cut by a well-known market analyst overnight which added momentum to the positive trade throughout the day. Farmer sales of soybeans in Brazil were reported at 49 per cent last week which was unchanged from the week prior vs. the 5 year average of 25 per cent.

Higher prices early on prompted a wave of new sales by Brazilian farmers but the recent decline in prices has slowed additional sales. Weather conditions in South America have been mostly favorable so far this crop year.

Drier than normal conditions in central and northern Brazil early in year were a concern but rainfall over the last couple weeks have helped soil conditions. Concern is beginning to form around southern Brazil which has been trending drier than normal this month.

Argentina has heavy rainfall in the forecast for the middle of this week followed by another period of dry weather thereafter.

The wetter forecast for Argentina has delayed corn planting in areas which could mean some acreage is actually shifted over to soybeans which could be considered a long term negative to the price trend. The USDA "corrected" yesterday's 20,000 soybean oil sale to an unknown destination from US origin, to optional origin.

Wheat Futures Closed Higher

December Wheat finished up 3 1/4 at 845, 4 3/4 off the high and 7 1/2 up from the low. March Wheat closed up 2 3/4 at 860 1/2. This was 7 1/2 up from the low and 5 off the high.

December Chicago wheat traded slightly higher on the day and gained on KC and Minneapolis wheat contracts. The worse than expected winter wheat crop condition ratings released yesterday added a bullish bias to the market this morning and the strong corn and soybean market fueled additional buying support.

KC lost to Chicago wheat on the day as traders took profits in long KC vs. short Chicago wheat spreads. The weekly Winter Wheat Conditions report showed 34 per cent of the crop was rated good/excellent compared to 36 per cent last week and 50 per cent last year. This was below market expectations and the 3rd straight week of declines.

US wheat exports remain very sluggish but Japan is seeking 134,000 tonnes of feed wheat for January through February shipment. Japan also reported that corn usage in animal feed fell for the 9th straight month as buyers continue to use more wheat in rations.

Wheat usage was pegged at 4.4 per cent in September vs. 4.3 per cent in August and against year ago levels of 1.5 per cent. Some traders believe exports could pick up in 2013 if Argentina and Australia have less wheat to sell.

This could be supportive to the wheat market in the 1st quarter. Very little moisture is expected in the western plains to finish out this month which could leave a third to a half of the Hard Red Winter wheat crop entering dormancy with poor establishment. This added to the bullish sentiment throughout the day.

December Oats closed up 1 at 376 1/2. This was 4 1/4 up from the low and 1/4 off the high.

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