March corn was closed overnight due to the holidays and the first indication of price direction for this week will come from the 9:30 regular US opening trade. Outside market forces are mixed to somewhat restrictive to start the session today, but the trade appears to be poised to focus intensely on the threat of adverse South American crop conditions. While March corn saw a choppy and two-sided trade at times last Friday, it did manage to close up for the day and it also closed higher for the sixth session in a row. The corn market also managed to post the highest close since November 17th, and a large portion of the bull case continues to flow from fears of hot and dry in Argentina and parts of Brazil. With the initial outlook for this calls for continued stress on corn from high temps and dry conditions, the trade might be inclined to build in even more weather premium into prices. Talk of a high pressure ridge in Argentina and little in the way of noted rain events for the next 10 days could leave the South American weather as the main driving force for US corn prices for most of this week. Another element that might provide support to corn prices is the fact that the Hogs and Pigs report last week showed higher than expected supply at 2% above last year, which might be seen as supportive of improved feed use. A fear of slack demand from China was partially countervailed by news of some minor winter production losses in Russia and some deterioration in Ukraine crop conditions. The Commitments of Traders reports as of December 20th showed Non-Commercial traders were net long 133,984 contracts, a decrease of 5,704 contracts for the week. The long liquidation selling trend is seen as a short-term negative force. Non-Commercial and Non-reportable combined traders held a net long position of 33,189 contracts, down 5,882 for the week. Commodity Index traders held a net long position of 363,490 contracts, up 6,155 contracts for the week. The aggressive buying from index funds more than offset the selling from specs. Net weekly export sales for corn came in at 715,000 metric tonnes for the current marketing year and 238,000 for the next marketing year for a total of 953,000 which was well above trade expectations. Cumulative corn sales stand at 59.2% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 50.3%. Sales of 445,000 metric tonnes are needed each week to reach the USDA forecast. Some producer selling was noted on the rally Friday, and prices eased off of the midday highs into the close. March corn was up as much as 48 3/4 cents from Thursday's lows.
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