December corn was trading unchanged near 7:00 am cst and Dalian corn surged by almost 1% overnight. Most markets were higher overnight as the US Dollar traded lower but rose to a 4-month high against the Yen as investors believe the BOJ will extend stimulus policies next week. Positive manufacturing out of China, better than expected housing data in the US, and confirmation that the Fed will maintain loose monetary policies going forward boosted commodity markets. Crude oil traded stronger overnight and Gold rebounded after dipping below 1700 yesterday.
Loose monetary policies by the Federal Reserve along with a positive ethanol production report yesterday were supportive to corn overnight. However, the mild strength is being offset by expectations of another weak export sales report this morning. Stronger petroleum markets along with steady gains in wheat are also helping to support. The trade was mixed yesterday as corn rode the coat tails of surging soybean and wheat markets and traded volume was substantial at 248,793 contracts and open interest rose by 5,000. The data suggests a mixed bias considering December corn closed lower on the day but losses were modest throughout the session.
Corn basis on the river and in the Gulf of Mexico was stronger yesterday but the gains were mostly driven by strength in the interior market and on surging freight costs on the river. October barges were bid 69 over the December contract and November at 66. Offers were thin but rose by 1-2 cents. Morris, IL river bids surged by 10 cents per bushel to 15 cents under the December contracts, Decatur, IL was unchanged at 15 cents over, and river bids in Davenport, IA jumped a penny to 19 cents under. Export sales are expected to disappoint this morning with the trade expecting sales near 200,000 tonnes which seems optimistic since the average for the last 5 weeks is 114,000 tonnes. Sales over 250,000 or more would be friendly to the short term outlook in the market. Taiwan bought 23,000 tonnes of US corn for November through December delivery overnight.
Ethanol Production for the week ending October 19th was pegged at 801,000 barrels per day which was up from 797,000 the week prior. Corn usage rose to a 4-week high at 84.1 million bushels which was 420,000 bushels higher than last week and ethanol stocks fell by 223,000 barrels. Ethanol margins remain in the red for most of the industry but despite the recent slide in crude oil and the narrowing of the ethanol vs. gasoline spread, there remains plenty of economic incentive for blenders to maximize ethanol consumption. Strong DDG prices are helping facilities offset some of the costs associated with surging corn prices as they generally remain above the value of corn. The strong soybean meal market is supportive to the price trend in DDG's.
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