Corn was lower today, pressured by fears of slowing demand as well as by commodity fund selling. CH was 8 ¾ cents lower and CK also fell 8 ¾ cents. Commodity funds had sold an estimated 6000 corn contracts as of midday. The recent strength in the Dollar is causing concern that the pace of U.S. corn exports will decrease in coming weeks. Ethanol production is also a concern given the recent drop in margins and increase in inventories. The ethanol production report released today did nothing to allay the concern for ethanol demand. Ethanol production last week was 2.4% below the previous week level. Corn used in last week’s ethanol production was estimated at 99.7 million bu. Corn usage needs to average 98.8 million bu. each week to meet the USDA’s 2014/15 projection of 5.15 billion bu. of corn used in ethanol production. Stocks of ethanol increased by 750,000 barrels to 18.8 million barrels. Ethanol margins remain positive, although they have declined significantly since mid-November. Lower margins and increasing inventory levels may point to further decreases in production as the winter progresses and ethanol remains a premium to unleaded gasoline. The average trade guess for corn production in Monday’s USDA January report is 14.349 billion bu. Ending stocks are expected to be near 1.925 billion bu. Soybeans were mixed at the close today. SF settled 1 ¾ cents higher and SH gained ½ cent. Deferred contracts were steady to weaker. As of the noon hour, commodity funds had purchased an estimated 2500 contracts of soybeans. Index funds began their annual rebalance today. Expectations are that they will be net buyers of soybeans during the portfolio rebalancing period which will continue over the next four business days. There was little fresh market moving news today as traders await the deluge of information from next Monday’s USDA Production, Supply/Demand, and Quarterly grain stocks reports. The average trade guess for 2014/15 soybean production is 3.956 billion bu. with ending stocks expected to be near 395 million bu. South American weather forecasts haven’t changed much this week with favorable weather expected for Argentina and Brazil with the exception of Northeast Brazil which is expected to get less than normal rainfall over the next two weeks. Early soybean yields in Mato Grosso have been excellent.
Posted on: Wed, 07 Jan 2015 21:37:53 +0000
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