December corn was trading 5 cents lower near 7:00 am CST and Dalian corn was down 0.26% overnight. European markets were lower overnight and most commodities were steady ahead of the weekend. The grain market saw modest losses except for soybeans which suffered from a slightly bearish USDA report yesterday. US share prices were marginally higher early this morning, but not strong enough to signal a risk-on environment in the early going. Today the US scheduled report slate will present a US PPI reading that is expected to be a little hot, a private consumer sentiment reading and a Richmond Fed speech all in the morning trade.
December corn saw modest loses overnight after surging to its highest level since September 17th. The USDA report was considered bullish for corn and traded volume was explosive with just over 375,200 contracts trading hands, open interest increased by 50,116 contracts, and it was estimated that funds bought close to 25,000 contracts. The USDA reported the US average corn yield at 122 bushels per acre and production at 10.706 billion bushels in yesterday's report. Overall production fell 21 million bushels below last month's estimate but was 105 million above market estimates.
The US ending stocks estimate was reported at 619 million bushels and was perhaps the most bullish number to come out of the report given that it now puts the stocks to usage ratio under 6% and is the lowest since 1995/96. The world corn balance sheet suffered as well after cutting world ending stocks to 117.3 million tonnes vs. 123.9 previous. The world corn stocks to usage ratio is 13.7% with is the lowest level since 1973.
Total demand declined by just 100 million bushels due to lower exports and long term headwinds may remain for the corn market with export demand lagging the pace needed to meet this year's forecast and negative ethanol margins for many areas of the US Midwest remain. This week's export sales report is expected to show sales of 300-425,000 tonnes vs. last week's 327,000 tonnes. The USDA left Argentina corn exports unchanged at 18.50 million tonnes while Brazil exports rose to 16 million tonnes vs. 15 previously. South American corn continues to trade at a discount to US. South Korea's largest feed maker canceled its tender to buy 210,000 tonnes of corn after prices were too high following yesterday's rally.
Cash corn prices rose to $8.00 at some processing and ethanol plants which may have spurred on new sales by farmers yesterday. Davenport, IA river bids rose by 4 cents to 16 cents under the December contract while bids in Blair, NE were pegged at 35 cents over the December contract which was up 5 cents from the day prior.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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