The corn market was lower on Tuesday ahead of the USDA report as we saw weaker outside markets and traders squaring positions. The July and December contracts closed down about 6 cents near the lows of the day as corn gapped lower on the opening and never really recovered. The outside market seemed to be the spark that corn needed to open lower as the US$ was higher and crude was lower right from the beginning. The US$ closed up about 20 points and crude was slightly lower after trading down $1.50 during the grain session. There is very little fundamental news right now as farmers are starting to talk about the up coming planting season and the crop from Brazil and Argentina is actually getting bigger which is what usually happens with big crops. The USDA report today isn’t usually a big deal, but with the possible readjustment of the 2009 production, it could be important today. The March 31st report is the much bigger report as we get planting intentions and actual stocks numbers from Sept 1st to Mar 1st. Technically, the corn market looks negative, but it has found some buyers on breaks. The volume was ok at 187,000 contracts and funds were sellers of about 7,000 contracts.
Overnight, the corn market closed slightly lower with the July and December closing down about 2 cents. The USDA report didn’t have any big surprises, but it will probably be considered bearish because of the increased carryout and the very slight reduction in production. The market was looking for a bigger reduction in production and a decline in usage keeping the ending stocks about the same. What we got was a pretty good reduction in the export number which raised the ending stocks 80 mil bushels. This isn’t a big adjustment, but the market estimates were for unchanged. The world stocks numbers jumped higher as well as Argentina increased their production number significantly, which shouldn’t be completely unexpected, but it is now in print by the USDA . The USDA reduced exports 100 mil while the market was expecting a reduction of 50 mil. The corn market will be called 2-4 lower this morning with the outside markets trading around unchanged. Remember, the corn market has broker 13 cents the last 3 days into the report, so a break today will probably be supported and if it doesn’t, watch out.
Globex Overnight Contract Last Net Change High Low Volume ZCH10 357^0 -1^6 359^0 356^6 3177 ZCK10 367^2 -1^6 369^6 367^0 7293 ZCN10 378^2 -1^6 380^2 377^6 1765 ZCU10 386^6 -2^0 389^0 386^6 1467
Post Report Opening Calls: 2-4 lower
Cash Markets -- CIF Corn steady up 1. Mar. +34 to +36, April +37 to +38, May +40 to +41, June +35 to +38, July +39 to +41, Oct. +41 to +43, Nov. +41 to +43, Jan. +36 to +38
TREND:
Crop report in AM so should leave well enough alone and see what the report says-----but I see a wheat and corn market that closed right on the low of the day and low of the trade for the last 2 to 3 weeks. Think this leaves those markets vulnerable to a bearish report that causes the market to gap lower leaving this weeks trade and possibly moving to a test of the Jan-Feb lows.
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