May corn was down 1/4 cent late in the overnight session. Outside markets look mostly positive today with a weaker US dollar and higher equity markets. There were 164 deliveries against the March contract overnight. A positive tilt to the USDA Outlook Forum plus the renewed profitability of ethanol due to the gasoline surge last week leaves the market with relatively strong demand and an extremely tight outlook for stocks. China has asked grain buyers to slow down or even halt grain purchases in an attempt to hold down inflation. Argentina dissolved their agricultural trade agency (ONCCA), which was responsible for corn and wheat export limits. It is unclear from where permission to export is to be gotten, so the short term impact could slow movement out of Argentina. March corn closed 26 1/4 cents higher on the session on Friday and 2 1/4 cents higher for the week. Ideas that last week's break was overdone and that end user demand is picking up steam on the setback helped support active buying. Fund buyers then turned active, and this helped spark strong gains and a sharp rally to within 2 cents of the contract highs. Strong export sales, a sharp rally in equity markets and a more stable tone to the political situation in the Middle East lent support. Weekly export sales for corn came in at a whopping 1.501 million tonnes for the current marketing year and 150,600 for the next marketing year for a total of 1.652 million. Old crop sales were the highest since August 26th. Cumulative corn sales stand at 66.4% of the USDA forecast for the season vs. a 5-year average of 64.8%. Old crop sales need to average just 594,000 tonnes to reach the USDA forecast. This compares with the 4-week average of 1.2 million tonnes. A general perception that the US supply/demand outlook for the 2011/12 season is still extremely tight and that it may take two years of good crop production to ease ending stocks concerns added to the bullish tone. May corn touched limit-up before the buying eased. Ideas that the surge higher in gasoline prices might help boost corn demand for ethanol added to the positive tone. The Commitments of Traders reports as of February 22nd showed non-commercial traders were net long 408,512 contracts, down just 4,326 contracts for the week. Nonreportable traders (small specs and some producers) were net short 75,088 contracts, an increase of 7,495. Commodity index traders held a net long position of 394,709 contracts, up 17,737 contracts. Index funds had been reducing their net long position for the past few months, so this is a significant shift.
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