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NEAR-TERM MARKET FUNDAMENTALS: December corn continued to retreat from last week’s highs during the overnight session following a weekly Crop Progress report that left the good-to-excellent rating for the US corn crop unchanged from last week at 71%. This compares to 68% last year at this time and a 10-year average of 61% good-to-excellent. Ninety-seven percent of the crop reached the silking stage as of Sunday versus a 5-year average of 94%, with 52% of the crop in the dough stage and 14% of in the dent stage. The fact that this year’s crop remains ahead of the average pace of development in all categories greatly lessens the threat from and early frost according to one analyst, although he noted that a serious early frost last year caused little loss of yield despite the fact that the crop was very late. Traders said that a higher dollar is also contributing to weakness, as is evening up ahead of Thursday’s Crop Production and supply and demand reports. Analysts’ yield estimates are near unchanged from the USDA’s July yield forecast of 163.5 bushels per acre. Weather forecasts remain hot for most growing areas for the remainder of the week. Temperatures into tomorrow are expected to be in the mid to upper 90s in the middle and southern tiers of the Corn Belt with the low 90s expected in most of Iowa, northern Illinois and northern Indiana. Hotter temperatures are expected to the west and SW with Nebraska in the mid to upper 90s and the southern Plains and parts of Arkansas and Louisiana hitting the 100s today and tomorrow and possibly longer. This week’s export inspections for corn were 41.986 million bushels, up from 33.998 million last week. Inspections need to average 57.287 million bushels each week to reach the USDA’s current export projection for 2009/10. Traders continue to watch the world wheat and feed trade as those markets adjust to the aftereffects of the Russian drought. Vladimir Putin said yesterday that there is no certainty that the ban on grain exports will end on December 31st as the drought in Russia continues with no significant rain in sight. The largest feed maker in South Korea is in the market for up to 165,000 tonnes of corn today for delivery in November-December.
TODAY’S GUIDANCE: Look for erosion to continue in corn despite some stepped up demand due to the loss of feed wheat from the Black Sea region. The US crop is in better than average shape, funds are sitting on large long positions in corn and export shipments are lagging the pace needed to reach the USDA’s export projection for 2009/10. If the USDA raises its yield forecast by 1 bushel or more on Thursday, supplies will look to be adequate over the intermediate term. If yields are lowered, stocks will be viewed as tight. The margin for turning the market higher or lower is exceptionally narrow this year. The market could see a disappointing report this week (exports up only 50 million bushels and yield near 164-165) but in the end we see a lower yield and a jump of near 200-250 million bushels in exports as bullish factors to tighten the supply. First support in the December contract is near 407 and then near 396 1/2 to 400. First resistance is at 424 1/2 and 427 3/4.
TODAY’S MARKET IDEAS: The dollar and unchanged quality ratings may help push December corn down to support at 407 and then 399 3/4. Look for down until after the report and the break is likely a buying opportunity.
Corn Market Commentary – 2010.08.10
by Terry Roggensack on August 10, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
NEAR-TERM MARKET FUNDAMENTALS: December corn continued to retreat from last week’s highs during the overnight session following a weekly Crop Progress report that left the good-to-excellent rating for the US corn crop unchanged from last week at 71%. This compares to 68% last year at this time and a 10-year average of 61% good-to-excellent. Ninety-seven percent of the crop reached the silking stage as of Sunday versus a 5-year average of 94%, with 52% of the crop in the dough stage and 14% of in the dent stage. The fact that this year’s crop remains ahead of the average pace of development in all categories greatly lessens the threat from and early frost according to one analyst, although he noted that a serious early frost last year caused little loss of yield despite the fact that the crop was very late. Traders said that a higher dollar is also contributing to weakness, as is evening up ahead of Thursday’s Crop Production and supply and demand reports. Analysts’ yield estimates are near unchanged from the USDA’s July yield forecast of 163.5 bushels per acre. Weather forecasts remain hot for most growing areas for the remainder of the week. Temperatures into tomorrow are expected to be in the mid to upper 90s in the middle and southern tiers of the Corn Belt with the low 90s expected in most of Iowa, northern Illinois and northern Indiana. Hotter temperatures are expected to the west and SW with Nebraska in the mid to upper 90s and the southern Plains and parts of Arkansas and Louisiana hitting the 100s today and tomorrow and possibly longer. This week’s export inspections for corn were 41.986 million bushels, up from 33.998 million last week. Inspections need to average 57.287 million bushels each week to reach the USDA’s current export projection for 2009/10. Traders continue to watch the world wheat and feed trade as those markets adjust to the aftereffects of the Russian drought. Vladimir Putin said yesterday that there is no certainty that the ban on grain exports will end on December 31st as the drought in Russia continues with no significant rain in sight. The largest feed maker in South Korea is in the market for up to 165,000 tonnes of corn today for delivery in November-December.
TODAY’S GUIDANCE: Look for erosion to continue in corn despite some stepped up demand due to the loss of feed wheat from the Black Sea region. The US crop is in better than average shape, funds are sitting on large long positions in corn and export shipments are lagging the pace needed to reach the USDA’s export projection for 2009/10. If the USDA raises its yield forecast by 1 bushel or more on Thursday, supplies will look to be adequate over the intermediate term. If yields are lowered, stocks will be viewed as tight. The margin for turning the market higher or lower is exceptionally narrow this year. The market could see a disappointing report this week (exports up only 50 million bushels and yield near 164-165) but in the end we see a lower yield and a jump of near 200-250 million bushels in exports as bullish factors to tighten the supply. First support in the December contract is near 407 and then near 396 1/2 to 400. First resistance is at 424 1/2 and 427 3/4.
TODAY’S MARKET IDEAS: The dollar and unchanged quality ratings may help push December corn down to support at 407 and then 399 3/4. Look for down until after the report and the break is likely a buying opportunity.
Tags: Corn, Grains
About Terry Roggensack