Pre-Opening Corn Market Report for 2/27/2012

May corn was trading down 5 cents late in the overnight session. Outside market forces look negative today with a stronger US dollar and weakness in equity, energy and metal markets. The market absorbed the buying from China last week without much fanfare as the outlook for a record crop and a doubling of the ending stocks this season appears to be enough of an offset for now. Some weather concerns in China and a relatively dry soil condition in parts of the US does not seem to be enough of a concern to support new crop. May corn closed 1 1/2 cents higher on the session Friday but down 1 1/4 cents for the week. News that the USDA confirmed the outlook for sharply higher planted area, production and ending stocks for the 2012/13 season helped to pressure the market early and drive December corn down to the lowest level since January 20th. However, lows were made early in the day and the market saw a solid recover as talk of China demand and ideas that demand for US corn could remain strong due to lower than expected production in South America helped to support. Ending stocks were pegged at 1.616 billion bushels vs. 801 million this year and stocks/usage jumps to 12% from 6.3% this season. Traders seem to see the 164 trend yield as a bit of a stretch for the USDA as new planted areas are thought to be in lower yielding areas. At the outlook conference last year, trendline yield was 161.7 bushels per acre. South Korea bought 55,000 tonnes of corn at their optional origin tender. Weekly export sales came in at 840,800 metric tonnes which was near the low end of trade expectations. As of February 16th, cumulative corn sales stand at 69.9% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 64.8%. Sales of 460,000 metric tonnes are needed each week to reach the USDA forecast. The data, along with declining crop estimates for South America suggests that the USDA may revise exports higher and ending stocks even lower in the March supply/demand update. The Commitments of Traders reports as of February 21st showed Non-Commercial traders were net long 208,348 contracts, a decrease of 20,339 contracts for the week and the aggressive long liquidation selling trend is seen as a short-term bearish force. Non-Commercial and Nonreportable combined traders held a net long position of 83,839 contracts, down 11,591 for the week. Commodity Index traders held a net long position of 358,567 contracts, up 9,654 contracts for the week and this partially offset the selling from specs.

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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