May corn was trading 2 2/3 cents higher late in the overnight session. Outside market forces look a bit supportive with a firm US stock market. The USDA Supply/demand update this morning should help set the tone for the market. Traders see a drop in the 2011/12 ending stocks to near 720 million bushels but some traders believe the USDA is unlikely to show much of a decline in stocks from 801 million last month even with the tighter March 1st stocks as 800 is considered near pipeline minimum. Focus will also be on the South America crop projections. The weekly Corn Planting report showed that 7% of the crop is planted compared to 3% last week and 3% last year. The 10 year average for this time of year is 3% and this is seen as the fastest pace on record and compares with trade expectations near 8% complete. Illinois is already 17% planted and Missouri 23% as compared with 1% and 6% on average. May corn fell sharply yesterday and set-back to the lowest level since April 2nd. It is possible that the reversal in November soybeans provided some additive pressure to corn. Many traders think that corn was seeing fresh pressure from changing views toward the upcoming report, while others think the lack of a distinct frost impact might have caused some of the selling, as the market at times last week was pricing in the prospect of some frost damage. With a hard range down move in US equities and with US grain inspections for corn of only 22.364 million bushels (off expectations of 28 to 32 million bushels) the inspections news might have been considered a little bearish. While some analysts think that US corn stocks might be reduced in the USDA report Tuesday, that theory might have been mostly factored into corn prices with the rallies between March 29th and April 3rd. It is also possible that the corn trade was factoring in a record pace of US corn plantings. The break came even with a strong cash market as basis levels remain very strong. Decatur Illinois was bid at 28 cents over May from 26 cents last week and the cash market continues to show signs of extreme tightness.
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