Pre-Opening Corn Market Report for 12/9/2011

March corn was trading up 2 cents late in the overnight session. Outside market forces look positive today with a weaker US dollar and strong gains in US equity market overnight. There were still no corn deliveries against the December contract. News that the China government will buy corn from producers to re-stock state reserves helped to support the market overnight with China futures up 1.3% and March corn moving to a 5-session peak. The results of the USDA supply/demand report should help set the tone for the market today and into next week but outside forces are positive and the China news is supportive and this suggests that it may take negative news to avoid a bounce today. China will buy up to 12 million tonnes before the end of January from producers. For the USDA report for release before the opening, traders see ending stocks for the 2011/12 season near 830 million bushels as compared with 843 million last month and 866 million in October. While there is a stocks report in January which will give traders a better clue on domestic demand, traders see a revision higher in feed and ethanol usage as a reason for the stocks decline. The market faces a significant jump of near 6-8 million tonnes in world production if recent China and Brazil production ideas are revised for the report. Traders are looking for a slight increase in world ending stocks from the 121.57 million tonnes last month but without corresponding increase in demand, ending stocks could jump by several million tonnes. March corn opened moderately lower on the session yesterday but saw a steady flow of buying for the session and fairly aggressive buying late in the session to close moderately higher on the day and saw the highest close since December 1st. Weak outside markets pressured futures early, however, the market lacked new selling interest as traders see a tighter ending stocks forecast for the USDA report, export sales were better than expected and the 10-day weather outlook for Argentina is dry enough to spark some short-covering. Net weekly export sales came in at 695,500 metric tonnes for the current marketing year and 12,500 for the next marketing year for a total of 708,000. As of December 1st, cumulative corn sales stand at 56.2% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 46.4%. Sales of 453,000 metric tonnes are needed each week to reach the USDA forecast.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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