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CME: Corn Futures Closed Lower Tuesday

28 August 2013

US - December Corn finished down 14 1/4 at 486 1/4, 18 off the high and 1 1/4 up from the low. March Corn closed down 13 3/4 at 498 3/4. This was 3/4 up from the low and 17 off the high.

The corn market spent most of today's session in the red after sharp gains yesterday. Light showers drifted across parts of MI and OH overnight and the forecast for next week suggests the high heat for today will subside and there is a modest chance for light showers in northern IL and OH.

Confidence in the forecast is low but it may have been enough to spark some modest profit taking. Losses were limited on fresh speculative buying on mostly warm and dry conditions across the Corn Belt this week and on thoughts the US yield is between 150-155 bushels per acre vs. the current USDA estimate of 154.6. New crop spreads edged out which is inherently bearish for futures.

The July 2014 vs. December 2014 spread edged up to option price but found sellers there to take it back out to a 3 cent carry midday.

Cash traders noted that farmers have been light sellers this week on the rally which helped to pressure the basis for a large processor in Central IL. Overall, cash levels remain firm, particularly for ethanol plants in the western Corn Belt.

South Korea and Taiwan issued new export tenders today so traders will watch to see if buyers have shifted to South America or Ukraine supplies given the rally in prices since last week.

November Rice finished down 0.155 at 15.735, 0.165 off the high and equal to the low.

Soy Futures Closed Lower

November Soybeans finished down 19 at 1370 1/2, 39 off the high and 2 1/2 up from the low. January Soybeans closed down 21 1/2 at 1365 1/2. This was 2 3/4 up from the low and 40 1/2 off the high.

December Soymeal closed down 6.3 at 430.4. This was 1.9 up from the low and 15.4 off the high.

December Soybean Oil finished down 0.36 at 44.52, 0.65 off the high and 0.1 up from the low.

The session for soybeans was highly volatile with a new high for the move posted for November soybeans at 1409 1/2 in the morning hours but retraced some of the early gains to trade just under 14 for most of the session.

Fresh spec and fund buying due to the warm and dry forecast over the next 5-7 days was supportive along with a very blurry outlook as to where the US soybean yield will end up at. Some midday weather models suggested more favorable rainfall coverage into next week but confidence is low in this forecast.

Condition ratings declined last week and the current trend in conditions is similar to the 2003 and 2008 crop years. Both of these years saw below trend line yields with 2003 coming in at 33.9 bushels per acre and 2008 at 39.7 bushels per acre.

The USDA estimate for 2013/14 is currently 42.6 bushels per acre, up from 39.6 in 2012/13. New crop spreads traded mixed today but the July 2014 vs. November 2014 forged a new high for the move at +104 1/4.

Traders note that export demand data is strong and if yields continue to decline from here, spreads will need to work higher to push more demand to South America.

US FOB offers in the Gulf were down slightly from yesterday in the October through November shipment period. Meal offers were down sharply in the nearby shipment slot.

Wheat Futures Closed Lower

December Wheat finished down 3 at 663 3/4, 6 1/2 off the high and 3 up from the low. March Wheat closed down 3 1/4 at 675 1/2. This was 2 1/2 up from the low and 6 1/4 off the high.

A lower trade in the corn market pressured wheat futures this morning but bulls were able to push futures into the green at midday.

The market traded both sides of the unchanged throughout the session. Export interest has been light this week but traders noted that Brazil continues to be interested in US KC wheat.

There was another round of winterkill risk in South America overnight but reports on damage are highly variable at this point. The crop needs to move closer to harvest to fully understand how much if any damage has been done.

Business from the Middle East and North Africa has been thin with Saudi Arabia and Tunisia the only notable buyers this week. Tunisia bought 84,000 tonnes of soft milling wheat this morning on an optional origin basis for September through November shipment.

The Russian harvest is moving right along with 38.5 million tonnes cut so far vs. the total production estimate of 54 million tonnes according to the USDA.

European wheat futures edged higher today to a 1 month high on strong demand but China continues to be absent from the market.

China has been a buyer of French, US, and Australian wheat this year but has backed away from the market in the last month. Wheat vs. corn spreads edged higher and the KC market gained on Chicago today.

December Oats closed up 5 at 349 3/4. This was 7 1/2 up from the low and 6 1/4 off the high.

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