March corn was trading 2 cents lower at 7:00 am cst and Dalian corn was down 0.59% overnight. Commodity markets were mostly lower overnight following the Feds announcement of additional monetary easing and low interest rates. Gold traded down $25 at one point and copper, crude oil, and silver all traded lower as well. The EUR/USD and USD/JPY pushed the dollar index higher which kept grain markets steady to lower for most of the evening. There were no deliveries overnight which brings the month to date total to 940 contracts.
Poor ethanol demand data along with low expectations for today's export sales report kept bears in control yesterday and overnight. Volume yesterday was pegged at 163,891 vs. 210,727 contracts the previous session. Surprisingly, open interest saw a significant decline at 21,502 contracts and 20,844 contracts were taken out of the March contract. Risk assets got a boost yesterday afternoon following the announcement by the fed that monetary easing would continue. The market reaction was rather subdued as traders turn back to the deteriorating negotiations over the fiscal cliff in Washington DC.
The market is expecting today's export sales to be near 250,000 tonnes with the lowest estimate near 150,000 tonnes. Last week's sales were disappointing with only 51,600 tonnes which was a new 9 week low. The US remains a stiff premium to South American offers. South Korea is seeking 140,000 tonnes of US corn for April through June shipment. FOB offers basis the Gulf of Mexico were indicated at 84 over the March for February through March shipment while Brazilian offers were steady on the day. Draft restrictions have eased south of Cairo, IL and barge freight has softened which has eased the basis on the river. Basis in local ethanol markets has backed off slightly as margins hold in the red. A facility in Cedar Rapids, IA was down 2 at 23 over the March. Pubic data shows Iowa ethanol margins were near a 60 cent per bushel loss last week vs. 55 1/2 cents the previous week. This was the 19th consecutive week of negative processing margins.
Yesterday's EIA ethanol report was considered bearish for the corn market. Production for the week ending December 7th averaged 824,000 barrels per day which was down 1.3% vs. last week and down 12.2% vs. last year. Corn used in last week's production is estimated at 86.5 million bushels which was down from 87.68 million last week and usage needs to average 86.6 million bushels per week to meet the USDA estimate. Stocks rose to 20.02 million barrels from 19.34 last week. This is the highest ethanol stocks have been since June 29th and is up 17.4% vs. last year.
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