March corn was up 1/2 of a cent late in the overnight session. Outside market forces look positive today with a slight drop in the US dollar and strength for equity, energy and metal markets. Unlike the other grains, fund traders still held a hefty net long position in corn coming into the week and this helped spark aggressive selling yesterday. Traders see weather in Argentina as too dry for December but talk that much of the crop will not pollinate until January may keep soybeans more sensitive than corn to South America weather. Traders see weekly export sales for release this morning near 500,000 tonnes as compared with 708,000 last week. March corn closed sharply lower on the session yesterday as traders followed negative demand and deflationary signals from Europe instead of weather signals from Argentina. The forecast for dry weather over the next week or so for Argentina is expected to cause some stressful growing conditions but the trade focus yesterday was more about fund long liquidation. The early break came to 1/4 of a cent of the December 6th lows (580) which was the lowest price since March. The market hit a low of 579 1/4 overnight. The stronger US dollar yesterday and a collapse in energy and metal markets left the corn market in a long liquidation selling mode to drive the market sharply lower. South Korea is tendering to buy 200,000 tonnes of US corn. Ethanol production for the week ending December 9th averaged 938,000 barrels per day. This is down 1.7% vs. last week and up 0.11% vs. last year. Total Ethanol production for the week was 6.566 million barrels. Corn used in last week's production is estimated at 99.92 million bushels as compared with an average of 95.8 million bushels necessary each week to meet the USDA forecast for the season. Stocks were 17.058 million barrels which was down 4.88% from the previous week. This leaves implied demand for the week at a whopping 7.56 million barrels which is the highest weekly demand number on record (since at least 2001). India is expected to export near 1 million tonnes of corn in January and may export near 3 million tonnes for the 2011/12 season as India corn is priced about $40/tonne cheaper than US. With a record crop in China this year and re-stocking of 3-4 million tonnes already, traders do not see China importing corn until the second half of 2012. A senior China official indicated that there is more room to expand grain production in China through higher yield in the years ahead. China grain production hit another record high this year for the 8th consecutive increase in a row. Traders see Friday's Cattle-on-Feed supply up 3.5-4.0% from last year.
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