December corn is trading 2 cents lower near 7:30 am CST. Corn
traded slightly lower most of the overnight session following
yesterday's gains. Dalian corn was slightly lower overnight.
European and Asian markets have a positive tilt following
comments made by Germany's Chancellor that suggests she supports
the ECB's intervention in the bond market to stabilize their debt
crisis. The Euro bounced on the news and German bonds subsided.
The US Dollar is slightly lower this morning which is supportive
to commodities. The corn market saw another night of steady to
lower trade following yesterday's positive session. The weaker
move in corn was linked to positioning ahead of the weekend but
losses were limited due to a second consecutive night of surging
wheat prices. Thursday's traded volume was slightly weaker than
the day prior, with 191,324 contracts trading but open interest
grew by 12,499 contracts, signaling new longs entering the
market. Open interest has grown by nearly 20,000 contracts in the
last two days as December corn consolidates just above the 800
level. Corn basis was steady to slightly higher across the US
Midwest. Lack of country movement and slow farmer selling
provided a firmer tone to cash markets. Slow barge movement along
the Mississippi river caused by lower than normal water levels a
thin physical market stabilized basis levels in the Gulf of
Mexico for the second day in a row. Internationally, the
Argentine Agriculture Ministry pegged their 2011/12 corn output
at 21 million tonnes. This was unchanged from their previous
estimate. Parts of Ukraine have seen cool temperatures and better
rainfall recently. Temperatures are expected to heat back up
which should help corn crops. Drought conditions earlier this
summer have cut corn production in Ukraine from 24 million tonnes
to 21. Exports are set to decline from 14 million tonnes to 12.50
million tonnes. Corn production in several provinces in China
could see lower than expected production this year due to bugs
problems. The USDA recently increased their production estimate
from 195 million tonnes to 200. Some Chinese analysts suggest
500,000 to 1 million tonnes could be at risk due to the pests.
Shortages of seed and fertilizer in Brazil could have long term
implications on the corn market. Reports have surfaced that
suggest over a million tonnes of fertilizer, sitting at ports in
Brazil, may not make it to local corn and soybean producers. Poor
infrastructure, port strikes, and rain have caused nearly 60
ships to bottleneck. Poor railways and roads could exacerbate the
problems. The tight, domestic supply of fertilizer could raise
prices in the short term as farmers are just weeks away from
planting this year's crop.