December corn was up 1 1/4 cents late in the overnight session. Outside markets look somewhat positive with a weaker US dollar and strength in equity and energy markets. On top of the positive news from the USDA yesterday, there seems to be several other factors which might develop to tighten the situation further: 1) Traders see the possibility of lower yields next month (Illinois and Iowa yields were pegged at 170 from 157 last year and 175 from 165 last year respectively). 2) There were no adjustments made for lower acreage in the Dakotas or Minnesota. 3) Traders see Ohio and Indiana harvested acres lower due to some losses from late plantings. 4) What about all of the acres near the Missouri river when it flooded? 5) Sorghum supply is down 105 million bushels from last year, and pasture and range conditions in the southern plains are poor so the steep drop in feed usage may be overdone. 6) What if China imports more corn than expected? 7) Brazil is actively importing US ethanol, and implied usage last week was at a record high when considering production, declining stocks and exports. The short-term weather outlook is favorable for the crops in central Illinois and for the rest of the Midwest, as heat is expected to stay south and most areas are forecast to receive rain. Taiwan passed on a tender to buy 23,000 tonnes of US corn and 12,000 tonnes of US soybeans overnight. December corn closed sharply higher on the session yesterday. The USDA pegged corn production at 12.914 billion bushels, 168 million below trade expectations and down 556 million from last month. Average yield was pegged at 153 bushels per acre, compared with trade expectations at 155.5 and last months estimate of 158.7. While planted acres were left unchanged, harvested acres were revised down by 500,000, all in Texas, Oklahoma and Kansas. US ending stocks for 2011/12 season were begged at 714 million bushels, which was 37 million below trade expectations and down 156 million from last month's estimate. This results in a stocks to usage ratio of 5.4%, which is the second lowest on record (since at least 1960). The USDA lowered feed usage by 150 million bushels, ethanol usage by 50 million and exports by 150 million. World ending stocks were adjusted lower to 114.53 million tonnes from 115.66 million tonnes last month, which was already a 5-year low. World stocks/usage is just 13.2% which is the lowest since 1973. Weekly export sales for corn came in at 752,700, which was slightly below trade expectations. Cumulative corn sales stand at 18.7% of the USDA forecast for 2011/2012 (next) marketing year versus a 5 year average of 11.5%. The USDA trimmed world usage by about 7 million tonnes and raised wheat feeding by about 5 million tonnes. Brazil production for the coming year was raised by 2 million tonnes to 57 million, and the USDA left China corn production at a record high 178 million tonnes from 173 million last year and 158 million two years ago. China usage was left at 182.5 million tonnes. The China National Grains and Oils Information Centre pegged production this year at 182.5 million tonnes.
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