December corn is trading 5 1/2 cents higher near 7:30 am CST and there were no September corn deliveries. Dalian corn traded higher overnight. Most commodity markets were stronger overnight following the Feds decision to allow for more monetary easing for an undisclosed period of time. Crude oil hit $100 for the first time since May the sharp gains in wheat are providing a positive tilt to corn this morning. The US Dollar is trading lower for the 4th day in a row to a 10-month low and European and Asian equity markets were higher overnight offering broad based support to the commodity complex.
December corn is trading stronger this morning and is getting help from a sharply higher wheat market and weaker US Dollar. Export demand remains weak and South America will likely continue to fill the needs of major importers in the world. However, the December wheat to corn spread has increased from a 75 cent premium to wheat on September 6th to a 137 cent premium this morning. The fact that food grade wheat demand is beginning to pick up around the world is calling for higher wheat prices, which in effect will need to support corn so that it does not become too "cheap" as a feed ingredient. South Korean feed mill buyers began passing on feed wheat last week, choosing to buy corn instead. This trend may continue if corn maintains such a steep discount to Chicago wheat. A large commercial grain firm in Europe pegged the EU corn crop at just 53.7 million tonnes from 57.1 million tonnes as the USDA estimate this week.
Volume was recorded at 139,736 contracts yesterday which was down from the over 200,000 traded on Wednesday. Open interest increased by 4,961 contracts. It is possible that we may begin to see an increase in volume come into the grain markets following yesterday's announcement of more quantitative easing by the Federal Reserve. The decision by the Fed was widely anticipated; however large money managers have been given the green light to move money into hard assets like corn, crude oil, wheat, and copper without fear of the Fed pulling the plug anytime soon. Given this year's tight supply outlook, the corn market may be an attractive candidate for funds to park money heading into the end of the year.
Corn basis was slightly lower at river terminals on Thursday as farmers delivered corn to fulfill existing sales contracts. Many continue to wait for higher prices before further sales are made. Interior basis bids were mixed with and elevator in Council Bluffs, IA paying 10 cents under the December contracts vs. 11 cents under the day prior. Decatur, IL and Burns Harbor, IN were unchanged at 28 cents over the December contract and 20 cents under the December contract respectfully.
Brief delays in harvest may be seen for areas in Missouri, central Illinois, and northern Indiana into the weekend. Storms systems are tracking across this swath of land this morning but disruptions will remain isolated and short lived. Thoughts that Argentina is too wet and parts of Brazil are too dry are also supportive to the corn market.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.