Pre-Opening Corn Market Report for 6/20/2011

July corn was up 2 cents late in the overnight session with December down 1 cent. Outside market forces look negative today with a higher US dollar and weaker energy and equity markets. The market saw some short-term recovery trade on Friday from the aggressive selling pressures seen from fund traders in the past week but with negative outside forces today and the lack of a weather threat for the next 10 day in the forecast models, the market may see a return to the selling trend seen for much of last week. While the supply/demand set-up remains very tight, traders see both supply and demand factors moving toward the bear camp in the past week and this has helped keep corn in a long liquidation mode. Wet weather this week plus periods of warmth is seen as a combination which might help improve crop conditions. Traders will monitor the weekly update for this afternoon. On top of better weather, the market has taken pressure from the demand side with a sharp break in energy prices and a vote against ethanol from politicians last week. In addition, traders see feeders from around the world showing more interest in wheat for feeding. This could slow exports and slow corn feeding in the US. In addition, the USDA Cattle-on-Feed report showed that new cattle placed on feedlots in May was down near 11% from last year. The corn market showed some noted two sided volatility on Friday. The sharp slide in corn prices last week seemed to spur an increase in cash demand and that seemed to be the main catalyst behind the higher trade early on Friday as traders believe South Korea was an active buyer on the break. While the corn market hasn't typically given too much consideration to Brazilian winter corn production, ideas that output might be down more than was initially expected could have lent some support to prices. Some traders see losses of 3-4 million tonnes from earlier estimates. While late planted corn is a factor in determining yield, a large portion of the corn trade realizes that much of the determination of the ultimate yield in corn has yet to be determined with June and July weather keys. The Commitments of Traders reports as of June 14th showed Non-Commercial traders were net long 370,076 contracts, an increase of 6,276 contracts for the week. The buying trend is a positive short-term force and was nearly offset by selling from index funds. Commodity Index traders held a net long position of 366,618 contracts, down 5,774 contracts for the week. Open interest is down about 54,000 contracts from the June 13th peak.

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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