March corn was trading 3 3/4 cents lower late in the overnight session. Outside market forces look bearish this morning with weakness in metal and energy markets and a firm US dollar. Since January 26th, the old crop corn has mostly consolidated in a choppy trading range around the 640 level. Traders seem confident that the lower crops in South America will help boost US corn exports but this has been offset by the outlook for declining ethanol production in the months just ahead. Average ethanol profit margins for Iowa plants have been negative for 5 of the past 7 weeks and the negative margins this week are the worst since June of 2008. While old crop supply is expected to remain tight, US planted area for the new crop season is expected to be the highest since 1944 and up more than 2 million acres from last years 91.9 million acres planted. March corn closed slightly lower on the session yesterday after choppy and two-sided trade. While soybeans and wheat found support to trade higher yesterday, corn saw a steady flow of long liquidation selling to pressure early in the day. Traders see lower US ending stocks and higher exports for Thursday's supply/demand update and also expect a drop in global supply due to lower production estimates from South America. US ending stocks are expected to come down by about 55 million bushels from 846 million bushels in January due to the stronger export outlook. Traders see Brazil production near 59.2 million tonnes from 61 million in the last USDA update. Argentina production is expected near 21.6 million tonnes, down from 26 million in January. Some traders see the crop as low as 17-18 million tonnes but most estimates seem to be near 21 million for this report. The market came under selling pressures yesterday due to weakness in outside market forces and more talk of slowing ethanol output. A jump in the US dollar and weakness in other commodity markets including metals were seen as negative and the market faces similar pressures today. Weekly export inspections came in at 39.4 million bushels which was higher than expected and compares with 31 million necessary each week to reach the USDA projection for the year. The COT reports as of January 31st showed Non-Commercial traders were net long 215,318 contracts, an increase of 33,470 contracts for the week and the buying trend is seen as a short-term positive force.
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