Pre-Opening Corn Market Report for 9/20/2011

December corn was up 9 3/4 cents late in the overnight session. Outside market forces look positive today with a turn up in the energy and equity markets and a weaker US dollar. Rumors of China buying US and Argentina corn could not be confirmed, but it did help the market turn higher yesterday, and news of deteriorating crop conditions and a slow harvest pace helped to support the market further overnight. The weekly Crop Progress report showed that 10% of the US corn crop was harvested as of Sunday, compared to 18% last year. The 10 year average for this time of year is 12%. The report also showed that 51% of the crop was rated good/excellent, compared to 53% last week and 68% last year. In states where there was a freeze last week, conditions fell sharply. Minnesota conditions fell 7% to 56% good to excellent, compared with 89% last year. Kentucky conditions slipped 5%. Record high corn and pork prices in China have the country fighting inflation, and China plans to release 3.7 million tonnes of corn from state reserves to help ease prices into their harvest. Senior government officials in China indicated that the country will see a domestic shortfall of nearly 11 million tonnes by 2015 and will become a significant corn importer. A Canadian Wheat Board official in China believes the feed industry in China could consume 15-20 million tonnes of wheat as feed for the coming year. December corn rallied more than 16 cents off of the early lows yesterday to close higher on the day. Rumors that China buyers were inquiring about pricing corn for import from Argentina and the US helped support the strong rally off of the early lows, with rumors that buyers were looking to import 2-5 million tonnes. A combination of a surge in the US dollar and a sharp break in the US stock market left a bearish tilt to the market on the opening, and December corn saw more speculative selling and a push down to the lowest level since August 9th. Weekly export inspections, released during the session yesterday, came in at just 22.39 million bushels, which was below trade expectations and compared with 33.89 million needed each week to reach the USDA projection for the entire season. Friday's Commitments of Traders report showed trend-following fund traders (non-commercial less index funds) net long 242,204 contracts, which was down 27,937 contracts for the week ending September 13th. The selling trend is seen as a short term negative force. Ideas that China demand is on the rise as that country tries to aggressively expand pork production added to the positive tone.

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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