July corn was trading near unchanged late in the overnight session. Outside market forces are mixed to slightly supportive as a firm tone to gold and mixed trade in equity markets has fund traders a little less concerned with deflationary forces. Ideas that China will be an active buyer ahead along with renewed buying from fund traders helped to support the strong gains yesterday. The China National Grains and Oils Information Centre believes that China corn demand for the coming year will hit 199 million tonnes and with a lack of reserve corn this season, imports are likely to increase. The group sees record high production of 197.5 million tonnes. While traders see imports of less than 8 million tonnes, if re-stocking occurs and China production is off 5% from expectations (187.6 mmt production) then imports could easily reach 12-20 million tonnes. July corn closed sharply higher on the session yesterday and to a 5-session peak. Less than expected selling pressures from outside market forces and news of continued buying from China helped support. Private exporters reported to the USDA sales of 900,000 metric tonnes of US corn for China. The breakdown was 180,000 tonnes for the 2011/12 season and 720,000 for the 2012/13 season. Of this total, only 240,000 tonnes for 2012/13 season were new sales as the rest was previously reported as unknown destination. Ethanol production for the week ending May 11th was up 0.78% vs. last week and up 0.44% vs. last year. Corn used in last week's production is estimated at 96.3 million bushels. Corn use needs to average 93.9 million bushels per week to meet the USDA estimate for the season. Stocks were down 3.5% vs. last week and the drawdown in stocks combined with the highest weekly production since March 2nd leaves an implied weekly demand for ethanol at the highest since December 9th, 2011. While buying in December corn was limited by the perception of excellent weather for a fast start to the crop, strong cash basis levels and a lack of producer selling in spite of the strong basis continues to support the old crop corn. The two-week outlook still shows significant drying and warmer temperatures for the central and southern Midwest as rain systems hit the northern half of the corn belt. Extended models show a chance of good Midwest rains late in the 11-15 day period but if this event is pulled out of the forecast, some traders might begin to doubt the record yield forecast of 166 bu/acre. For the weekly export sales report, traders see sales near 1.1 million tonnes as compared with 473,400 tonnes last week.
Join the Discussion