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NEAR-TERM MARKET FUNDAMENTALS: December corn pushed higher overnight, moving through the high set on January 12th following a very bearish Quarterly Grain Stocks report. This marked the third straight day of higher highs in the December contract and it followed a new high for the July-August rally on Friday. Traders said that Friday’s gains came on a supportive tone from outside markets along with reports that early yields for corn are coming in at lower than expected levels. Analysts have lowered their yield forecasts to below 164 bushels per acre from the 165 bushels per acre forecast by the USDA on its August Crop Production report. Each drop of 1 bushel per acre in the yield would reduce the overall crop by 81 million bushels. Outside markets were more mixed/neutral overnight. Above normal temperatures have returned to the Corn Belt with readings above 90 expected in the eastern Corn Belt today. This area of heat is expected to expand tomorrow to include parts of the central Corn Belt, the mid south, and parts of Missouri and the most of the central Plains. A cold front is expected on Wednesday and Thursday which should bring temperatures closer to normal. Rain is expected to be minimal into mid week with the exception of light to moderate scattered rains in the NW, the Plains and from the Delta on to the east. Cooler weather continues to prevail in drought stricken areas of Russia, but scattered rains over the past several days have still left soil moisture levels short to very short across many growing areas. Rain in Germany continues to cause harvest problems and this is expected to reduce up to half of the wheat crop there to feed wheat quality. The Commitments of Traders report for the week ending August 24th showed selling by funds. Trend-following (managed) funds were net sellers of 17,927 contracts to reduce their net long position to 275,795 contracts. Index funds were net seller of 250 contracts for another small reduction in their near record large holdings. Tomorrow is First Notice Day for the September corn futures contract.
TODAY’S GUIDANCE: If we see a 100 million bushel increase in export demand due to tighter Black Sea feedgrain exports and a drop of yield of 3 bushels per acre from the last USDA forecast, ending stocks would slip under 1 billion bushels and stocks/usage to 7.2%, the second tightest on record. Spec buying on new highs on Friday and overnight have added to the strong buying demand from importers in recent weeks to keep the corn market in an uptrend. The December contract is nearing its January highs at 449 3/4, and traders indicate that further technical buying and stops may be waiting near that level to add to support. A push above that level would project a move to as high as 485 to 500 over the intermediate to longer term. First support in the December contract is near 436 1/4 and then at 424 to 426. Next resistance is at 449 3/4.
Corn Market Commentary – 2010.08.30
by Terry Roggensack on August 30, 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 pushed higher overnight, moving through the high set on January 12th following a very bearish Quarterly Grain Stocks report. This marked the third straight day of higher highs in the December contract and it followed a new high for the July-August rally on Friday. Traders said that Friday’s gains came on a supportive tone from outside markets along with reports that early yields for corn are coming in at lower than expected levels. Analysts have lowered their yield forecasts to below 164 bushels per acre from the 165 bushels per acre forecast by the USDA on its August Crop Production report. Each drop of 1 bushel per acre in the yield would reduce the overall crop by 81 million bushels. Outside markets were more mixed/neutral overnight. Above normal temperatures have returned to the Corn Belt with readings above 90 expected in the eastern Corn Belt today. This area of heat is expected to expand tomorrow to include parts of the central Corn Belt, the mid south, and parts of Missouri and the most of the central Plains. A cold front is expected on Wednesday and Thursday which should bring temperatures closer to normal. Rain is expected to be minimal into mid week with the exception of light to moderate scattered rains in the NW, the Plains and from the Delta on to the east. Cooler weather continues to prevail in drought stricken areas of Russia, but scattered rains over the past several days have still left soil moisture levels short to very short across many growing areas. Rain in Germany continues to cause harvest problems and this is expected to reduce up to half of the wheat crop there to feed wheat quality. The Commitments of Traders report for the week ending August 24th showed selling by funds. Trend-following (managed) funds were net sellers of 17,927 contracts to reduce their net long position to 275,795 contracts. Index funds were net seller of 250 contracts for another small reduction in their near record large holdings. Tomorrow is First Notice Day for the September corn futures contract.
TODAY’S GUIDANCE: If we see a 100 million bushel increase in export demand due to tighter Black Sea feedgrain exports and a drop of yield of 3 bushels per acre from the last USDA forecast, ending stocks would slip under 1 billion bushels and stocks/usage to 7.2%, the second tightest on record. Spec buying on new highs on Friday and overnight have added to the strong buying demand from importers in recent weeks to keep the corn market in an uptrend. The December contract is nearing its January highs at 449 3/4, and traders indicate that further technical buying and stops may be waiting near that level to add to support. A push above that level would project a move to as high as 485 to 500 over the intermediate to longer term. First support in the December contract is near 436 1/4 and then at 424 to 426. Next resistance is at 449 3/4.
Tags: Corn, Grains
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