March corn was up 4 1/4 cents late in the overnight session. Outside forces look somewhat supportive for today. The trade focus for the USDA reports this morning appears to be on the December 1st stocks report and the potential to see another adjustment lower in yield. Traders expect the report to show December 1st corn stocks to come in near 10.065 billion bushels or about 835 million bushels below last year but the range of estimates for this report is about 1.3 billion bushels as some traders believe September 1st beginning stocks may have included some of the 2010 harvest. If part of the beginning stocks were also counted as production, then the December 1st stocks could come in well below expectations. Traders also see corn production for the 2010 crop down about 40 million bushels from the last forecast of 12.54 billion bushels. This would come from a lower yield estimate. Both world and US ending stocks are expected to decline with US ending stocks expected to be down about 50 million bushels from 832 million bushels in the December update. Stocks/usage in already at the second lowest in history so a further tightening would be considered supportive and might even suggest that price rationing is in order. Traders also see a 3-4 million tonne decline in world ending stocks for the supply/demand report due to lower Argentina production estimate. March corn started strong yesterday and closed unchanged on the session. A combination of supportive outside market forces, mostly dry weather in the Argentina forecast and positioning ahead of the key USDA reports helped to support higher trade early. In addition, news of export sales plus a general inflationary tone to grain markets added to the early positive tone. However, a turn down in soybean prices and a short-term firming trend for the US dollar may have contributed to the sell-off. More aggressive late selling in soybeans and wheat contributed to the late break. Private exporters announced a sale of 116,000 tonnes of US corn for unknown destination for the 2010/11 marketing year and 125,000 tonnes of US corn for Mexico for the 2011/12 season. Traders are beginning to take note of the foot-and-mouth disease outbreak in South Korea as the country has been forced to cull near 12% of the hog herd which could negatively impact corn imports for the coming year.
Join the Discussion