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CME: Corn Futures Closed Lower Friday

12 August 2013

US - September Corn finished down 7 3/4 at 465 3/4, 11 off the high and 1 3/4 up from the low. December Corn closed down 7 1/4 at 452 1/2. This was 1/2 up from the low and 10 1/4 off the high.

A mixed to somewhat bearish weather forecast over the next 5 days continues to keep any rally short lived in the corn market.

December corn made a new multi-year low today but traders noted volume was light ahead of the weekend and the USDA report on Monday.

The trade is looking for a slight increase in the US corn yield, supply, and ending stocks for the 2013/14 crop year on next Monday's report. A surprise for the report could be that the USDA begins to ratchet demand higher in feed and export usage.

Wheat vs. corn spreads are at historically higher levels and cumulative new crop export sales to date are trending above the 5 year average. Increases in demand could absorb a large portion of supply and take bulls by surprise.

Funds added to their record short corn position this week. IA and MN remain drier than normal but overnight maps put an inch or more in parts of the region but recent weather patterns that suggested similar amounts failed to materialize.

A private crop forecaster estimated that the US corn crop would be 14.060 billion bushels, up from their prior outlook of 14 billion.

The average yield was pegged at 159.1 bushels per acre as compared to 158.5 previously. The group uses satellite imagery for their analysis but also scouted fields in the Corn Belt this week.

September Rice finished down 0.09 at 15.19, 0.095 off the high and equal to the low.

Soy Futures Closed Lower

August Soybeans finished down 15 at 1340 3/4, 25 1/2 off the high and 3/4 up from the low. November Soybeans closed down 2 at 1182 1/4. This was 2 1/4 up from the low and 12 1/4 off the high.

August Soymeal closed down 2 at 420.5. This was 8.5 up from the low and 8.5 off the high.

August Soybean Oil finished down 0.25 at 41.4, 0.41 off the high and equal to the low.

The soybean market was trading higher this morning but by midday old vs. new crop spreads collapsed and this took the market lower.

Strong old crop cash markets and talk of an oversold technical condition were seen as supportive factors but this failed to offer upside momentum ahead of the weekend.

Traders noted light volume today and positioning ahead of the weekend and next Monday's USDA report where the market expects to see a decline in 2013/14 production and ending stocks.

This runs counter to favorable condition ratings of the crop to date and the fact that August weather is the determining factor when it comes to yield potential.

So far, weather has been quite conducive to favorable yields but many crops in the northwest portion of the Corn Belt remain well behind in growth.

China saw a nice slate of economic data this week which has added to the long term optimism over their economic growth.

Copper is up over 1% today which generally trades off the sentiment in China given that they are the world largest importer of the industrial metal.

The US Dollar was slightly higher midday but was down sharply for the week which added a boost to many components of the commodity complex that relate to China.

Wheat Futures Closed Lower

September Wheat finished down 7 3/4 at 633 1/2, 11 1/2 off the high and 3 up from the low. December Wheat closed down 6 1/2 at 647 1/4. This was 3 3/4 up from the low and 10 1/4 off the high.

Wheat futures followed corn lower today with losses led by the Chicago market. Kansas City held up rather well against the pressure and extended its premium to Chicago wheat.

Strong nearby cash premiums and favorable export demand are seen as supportive influences. The US continues to post weekly sales to Brazil which is supportive although other export business around the world has been tough to find given cheaper supplies from Australia, the Black Sea, and France.

The France Farm Ministry raised their crop year forecast for wheat production to 36.1 million tonnes, up from 35.9 last month and up from 35.5 million last year.

Traders see Russian wheat production inching lower in the months ahead due to extreme heat and untimely rainfall in key growing regions.

Countervailing these adjustments is estimates that peg the Romanian crop at 7.3 million tonnes, up from 5.2 in 2012 and a new record high.

Romania has been aggressive with export offers on recent tenders and sold a portion of the last Egyptian tender.

September Oats closed down 3 at 359. This was 4 3/4 up from the low and 13 off the high.

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