March corn was down 1 3/4 cents late in the overnight session. Outside markets looked negative with a strong US dollar and weakness in equities. This was partially offset by firm energy prices. The outlook for extreme tightness ahead has helped to support the uptrend in corn, but weakness in the other grains was a negative factor yesterday. The market gave back all of its early gains yesterday to close near unchanged after coming under pressure from declines in wheat and soybeans. Follow-through buying after Wednesday's bullish USDA ending stocks news and strong weekly export sales news helped support an early rally that took the market to its highest level since July 2008. The weekly export sales report, released before the open yesterday, came in at 1.107 million tonnes for the current marketing year and 104,500 tonnes for the next marketing year for a total of 1.212 million tonnes. The report showed that as of February 3rd, cumulative corn sales stood at 61.3% of the USDA forecast for 2010/11 (current) marketing year versus a 5 year average of 61.8%. Sales of 639,000 metric tonnes are needed each week to reach the USDA forecast. Ideas that China will be short on feedgrains this year has helped to provide underlying support, and with US stocks extremely tight and prices high, traders suspect that China will continue to be a strong importer of US distiller dry grains and Australian feedwheat. In addition, the European Union is proposing to temporarily suspend its import tariffs on feed wheat and barley in order to secure livestock feed. Keep in mind that world coarse grain supply at the end of the 2010/11 marketing year is expected to be at only a 50-day supply, the lowest since 1973. For the US, the 2010/11 ending stocks of corn are expected to be at an 18-day supply, a record low (back to at least 1960). South Korea is expected to tender for corn and feedwheat. It has also been reported that Mexico will need to replant 740,000 acres of their corn crop after this week's abnormally low temperatures.
Join the Discussion