March corn was trading 8 3/4 cents higher late in the overnight session. Outside market forces look positive again today with a weaker US dollar and strength in energy and metal markets. With a surging cash basis level, uncertainty on South America supply and continued tight producer holding in the US, news from the Fed Reserves that they will hold interest rates down into 2014 was seen as a signal that the US and China will be accommodative for monetary policy and this sparked increased buying from fund traders in corn and many other key commodity markets. Coming into 2012, fund traders were certainly less committed to corn than last year and the news may be enough to revive interest in corn and other commodity markets. The index fund net long position to start this year was down 93,795 contracts as compared with the start of 2011. The non-commercial net long position to start this year was down 195,541 contracts compared with the start of 2011 and the managed money traders from the supplemental COT report net long position was down 181,499 contracts. If confidence grows regarding the prospects for commodity prices ahead, there could be significant investor interest in corn ahead. March corn closed higher yesterday and pushed to the highest level since January 12th. Talk that the surge in cash prices had sparked some increased producer selling and talk that recent weather in Argentina may have stabilized crop conditions helped to trigger some early weakness. However, the market managed to close higher on the day even after gulf basis slipped 2 cents on talk of better farmer selling. The Argentina Ag Minister believes that corn exports will still total near 15.4 million tonnes this season even with the lower crop. The USDA had projected 18.5 million in the last USDA monthly update. If the US gets all of the extra business left over from Argentina, US exports will need to be revised higher by 3.1 million tonnes or 122 million bushels. The current USDA ending stocks estimate for the 2011/12 season is just 846 million bushels. Traders also see the possibility of near 50-100 million bushels more corn usage for ethanol and a similar amount for livestock feeding. Higher usage would just cut into the already tight ending stocks projection. Ethanol production for the week ending January 20th averaged 934,000 barrels per day. This is down 0.74% vs. last week and up 1.3% vs. last year. Total Ethanol production for the week was 6.538 million barrels. Corn used in last week's production is estimated at 99.49 million bushels as compared with the weekly average pace of 94.9 million bushels necessary per week to meet this crop year's USDA estimate. Stocks were 19.8 million barrels which was up 1.4% vs. last week and up 4% vs. last year.
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