May corn was trading 2 1/2 cents higher late in the overnight session. Outside market forces look a bit supportive overnight with a firm US stock market, weakness in the US dollar and steady energy prices. China futures were down 0.5% overnight. Fairly aggressive long liquidation selling emerged in the old crop corn contracts yesterday to drive the market lower. The USDA seemed to have the opportunity to raise feed usage, raise China import demand and lower ending stocks yesterday but this did not occur and a long liquidation trend emerged as the dominate force. Cash markets remain strong and May corn held up better than July. A record fast plantings pace, ideas that feed demand of 100-200 million bushels for the old crop season will be displaced by new crop corn and talk that China demand for corn will not emerge until the new crop season were all factors which helped spark the selling. Producers are currently more active with fieldwork and cash selling remains slow. May corn managed a rally to a few cents higher on the day early in the session yesterday but closed sharply lower on the day and the market has now given back near 50% of the gains from the bullish stocks and acreage reports from late March. Fund trader long liquidation selling was noted; especially late in the session after the outside market forces turned bearish. The USDA pegged ending stocks for the 2011/12 season at 801 million bushels which was unchanged from last month and about 70-80 million bushels above trade expectations. With the smaller than expected March 1st stocks, traders had expected some adjustments higher in demand. The USDA did mention better wheat feeding into the summer and also believe that feed usage for the season will decline for old crop corn because new crop corn will be available in August. World ending stocks were pegged at 122.7 million tonnes from 124.5 last month and 125.02 million tonnes last year. This is a world stocks/usage level of 14.1% which is the lowest since 11.7% for the 1973/74 crop season. Beginning stocks were revised lower due to a 4 million tonne adjustment down in China. The record fast planting pace and the outlook for Midwest rain for the next week with warming weather plus a bearish tilt to outside market forces helped to pressure. The May/July corn spread continued to tighten even with sell-off for July/Dec.
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