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CME: Corn Futures Closed Higher Tuesday

16 January 2013

US - March Corn finished up 6 1/2 at 730 1/2, 4 off the high and 8 1/2 up from the low. May Corn closed up 7 3/4 at 730 3/4. This was 9 3/4 up from the low and 3 off the high.

March corn traded higher on the day as with support coming from active bull spreads and a firm interior basis.

A slightly drier forecast for areas of Argentina and Southern Brazil continue to add support but many are still positive in the aftermath of last Friday's USDA report that showed a small than expected December 1st stocks and 2012/13 ending stocks estimate.

Feed and ethanol demand continue to be supportive demand features but exports have shown no signs of improvement this year which could limit gains in the short term.

Taiwan was in for corn overnight seeking US, Argentina, and Brazil origins. Argentina's Agriculture of Ministry reported midday that they expect the 2012/13 corn harvest to come in between 28-30 million tonnes, up from prior estimates of 24.5 and against the current USDA estimate of 28 million tonnes.

Argentina began the year with too much rainfall which delayed planting but a shift to more favorable conditions in December has likely benefited the crop production outlook.

Soy Futures Closed Lower

March Soybeans closed down 6 at 1412. This was 4 up from the low and 24 1/4 off the high.

March soybeans traded both sides of the unchanged today but ended the day in negative territory. Profit taking and losses in the soybean meal market helped to limit gains on the day.

A slightly drier forecast for areas of Argentina and Southern Brazil kept buying support in the market but scattered showers are expected in areas of Northern Brazil which should ease drier areas. CIF basis bids for soybeans in the Gulf of Mexico were steady to slightly weaker midday.

Demand remains strong for US soybeans but river levels on the Mississippi have risen in the last week which is helping to promote better grain movement southbound to the Gulf of Mexico.

Production estimates in South America continue to show signs of optimism but traders contend that weather in the month of February could be the key to the production capabilities for both Argentina and Brazil.

Some suggests that soybean prices could trend lower if the weather cooperates and as demand shifts away from the US border.

Wheat Futures Closed Higher

March Wheat finished up 15 3/4 at 782 3/4, 7 off the high and 16 1/4 up from the low. May Wheat closed up 17 1/2 at 791. This was 17 1/2 up from the low and 7 1/4 off the high.

KC and Chicago wheat traded sharply higher on the day. Short covering and technical buying helped to support the move higher. Wheat saw significant gains on corn as some suggested wheat's premium to corn had narrowed too much given the likely increases in feed wheat usage going forward.

Export demand remains weak despite Chicago wheat's competitive price structure in the world market. Syria and Algeria have tendered for soft wheat and many expect the US to be active in each tender.

A tightening global supply outlook caused by less than ideal weather conditions has added optimism that the US will begin to sell a greater share of world export business.

Recent sales to Egypt by the US has been supportive but as a whole, total sales and shipments continue to lag the pace needed to reach this crop years USDA export estimate.

Active rainfall patterns east of Missouri have helped improve soil moisture levels but conditions in the west remain too dry.

Much of the snowfall has melted in areas of the western plains which is raising concern that wheat could be subject to winterkill if temperatures plummet.

March Oats closed up 2 1/2 at 356 1/2. This was 5 up from the low and 4 1/4 off the high.

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