March corn was trading 6 cents higher late in the overnight session. Outside market forces look positive today with higher trade for metal and energy markets and a weak tone for the US dollar. A slightly drier forecast for northern Argentina helped to boost grain markets overnight but a positive tilt to outside market forces and ideas that fund traders are getting to be more active buyers in grain markets helped to support as well. A surge higher in the cash basis levels in recent weeks to where some traders believe is the strongest basis in 18 years has helped to support. Strong cash markets and better than expected export and ethanol production demand has helped to support the firm recovery from last week's lows. March corn closed 5 1/2 cents higher on the session Friday and this left the market up 12 cents for the week. Strong cash markets and solid export sales were enough to offset the bearish weather forecast for South America to hold the market firm. Traders see strong demand from the ethanol sector and from exporters plus slow producer selling as the reason for the strong cash basis activity which has left traders with an idea that the short-term downside may be limited. Net weekly export sales came in at 759,900 metric tonnes which was higher than expected. Corn sales stand at 61.4% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 56.1%. Sales of 485,000 metric tonnes are needed each week to reach the USDA forecast. China was a noted buyer of 132,000 tonnes of corn switched from unknown destination. Ideas that there will be only about 10% of Argentina crop areas which might be under stress by early this week was seen as a limiting factor for the rally. Talk of dryness in Southern Brazil helped to provide some support. Private forecasts for higher planted acreage helped to limit the advance. China imported 569,763 tonnes of corn in December to push the 2011 total to 1.752 million tonnes, up 11.5% from the previous year. The Commitments of Traders reports as of January 17th showed Non-Commercial traders were net long 196,852 contracts, a decrease of 42,238 contracts for the week and the aggressive short-term selling trend is seen as a negative force. Non-Commercial and Nonreportable combined traders held a net long position of 85,081 contracts, down 36,332. Commodity Index traders held a net long position of 343,798 contracts, down 14,396 contracts for the week.
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