Pre-Opening Corn Market Report for 9/27/2011

December corn was up 14 cents late in the overnight session. Outside market forces are bullish this morning with a surge in energy markets and strong gains in the stock market and in precious metals. After recent reports of better than expected yields coming out of the fields, the corn market has seen an aggressive long liquidation selling trend by speculators. Yield is still uncertain, with reports of poor yields also occurring, and the long liquidation selling may slow in the wake of the higher close yesterday and follow-through buying overnight. Recent quarterly grain stocks reports have been very volatile, and traders view the market as oversold as it head into the September 1st stocks report on Friday. Some expect stocks to be lower than the 920 million estimate in the USDA's most recent supply/demand report from, but most traders believe that there is likely to be an adjustment higher due to competiton corn has felt from cheaper feedwheat. Ethanol production may also not have been as high as expected. December corn managed to close higher on the session yesterday after first trading down to its lowest level since July 12th, and it closed back over the 200-day moving average. A recovery in the stock market and a move higher on the day for crude oil helped to support the bounce. The upside may have been limited by talk of some rain in the forecast for Argentina and talk of increased harvest pressures ahead, with dry weather this week in the western Corn Belt and dry weather beginning Wednesday for the eastern Corn Belt. The weekly Crop Progress report showed that only 15% of the US corn crop was harvested as of Sunday, compared to 10% last week and 26% last year. The 10 year average for this time of year is 17%. The report also showed that 52% of the crop was rated good/excellent, compared to 51% last week and 66% last year. A strong recovery in equity and energy markets plus a surge higher in livestock prices lent support to the corn market yesterday and overnight. Talk of the extremely oversold technical condition of the market after recent steep losses and relative strength below 16 added to the support. Weekly export inspections, released during the session yesterday, came in at 34.3 million bushels, which was above trade expectations and above the 33.8 million bushels needed each week to reach the USDA projection. Traders are still expecting to see a Chinese crop above 180 million tonnes this year, but consumption is expected to grow to 220 million in the next 3-4 years. This may require bigger exports of better seed.

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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