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Morning Corn Commentary

Feb 15, 2012

The corn market closed on Tuesday as we saw more continuation which started on Friday.  The March contract closed down about 6 cents and the December closed down about 3 cents.  The corn market opened lower than expected trading almost 8 lower near the opening and corn seemed to be on the defensive trading about 5-7 lower for the first hour of trading.  The soy complex is the leader in grains and it moved higher in the 2nd hour of trading pulling corn off the lows, trading higher on the day, but selling quickly surfaced and it traded 4 lower.  The corn market traded between 3-7 lower most of the rest of the day before settling in the bottom end of the range.  The grain complex continues to be led higher by the soybeans as the weather in Brazil continues to be dry which has a bigger affect on soybeans than corn as the weather in Argentina keeps getting better and better each week.  The US$ was also strong on Tuesday which will negatively impact the grain markets.  The Chinese trade delegation is in Iowa today and that usually means they will announce some export sales, but those are expected to be bean sales.  The volume remains good at 399,000 contracts and funds were sellers of about 7,000 contracts. 

Overnight, the corn market closed around unchanged as the soybean complex was higher and the US$ was lower which are both positive for corn.  There isn’t a lot of news out again today as corn is a follower right now and we will await the export sales tomorrow morning and we will see if the good export sales continue.  The corn market seems to be stuck in a range and I don’t know if we can get any new information that can break them out of the range unless the soybeans really explode higher.  The updated baseline numbers released late next week could be another catalyst to push corn out of the recent trading range and I would suspect the downside is more probable than the upside.  We have been saying it and others are starting to talk about the fact that we could easily get 95-97 mil acres if the WCB remains dry and the planters start to roll.  The corn market will be called unchanged on the opening, but I would assume we might be a little lower.

GLOBEX Overnight
Contract         Last     Net Change  High   Low     Volume
ZCH12                       634^4 1^0                  637^6 632^6 10498
ZCK12                       638^2 0^2                  641^4 637^0 6443
ZCN12                       641^4 0^0                  644^6 640^0 3071
ZCU12                       590^0 -0^2                 591^2 589^0 233

LaSalle Street News Early Opening Calls:

LaSalle Street News Top News
-- Nonghyup Feed of S Korea is seeking up to 210,000 mt of feed Corn in a snap tender for Wednesday.  The grain is for arrival in May/June
-- MFG Feed of S Korea is seeking up to 140,000 mt of feed Corn in a snap tender for Wednesday.  The grain is for arrival in May/June
-- Japan's Ag Ministry again rolls over their SBS tender to Feb 22nd where they're seeking 200,000 mt of feed Barley and 100,000 mt of feed wheat
-- In their SBS tender today, Japan's Ag Ministry bought only 67,805 mt of feed wheat for shipment by May.  However they didn't purchase any of the 200,000 mt of barley they had sought.
-- Cash sources say 50,000 mt of optional origin Barley is being sought by Algeria in a tender to close Thursday, Feb 16th
-- Assessing the damage at Brazil's Santos port, officials say one out of four grain loading facilities was pretty much destroyed, while another likely was severely damaged, leaving only two operational over the next few weeks
-- Ukraine’s Ag Minister was quoted today as saying that there are no plans to limit Ukraine grain exports
-- The biofuels division of BP in Brazil says it plans to quadruple its sugar cane crushing capacity in the next five years to 30 mln mt/yr
-- Pending Tender:  Japan's ag ministry announced its looking to buy up to 200,000 mt feed barley and 100,000 mt of feed wheat in an SBS tender scheduled to end on Feb 15th and shipment by May 31st
-- Dalian Sept. Corn futures were down - 9 @ 2,374 yuan/mt.
-- Liffe Mar. Corn futures were unchanged @ 206.25 Euros/mt.
-- CBOT Corn Volume & Open Interest for February 14th 2012 was 399,967; Open interest increased +14,611 to 1,316,003.
-- CBOT Ethanol Volume & Open Interest for February 14th 2012 was 442; Open Interest decreased -15 to 10,992.
-- Weather: 6 – 10 Day Forecast: Normal to Above Temps. Normal to Above Precip
-- Outside markets. Crude Oil up $1.07 @ $101.81; Gold up +$12.30 @ $1730.00 ; Silver up +37c @ $33.72 ; US $ index off 18 pts @ 79.51

LaSalle Street News Cash Markets
-- CIF Corn steady off 1.  FH Feb. +79 to +82, Feb. +74 to +77, Mar. +65 to +67, A/M +60 to +63, J/J +60 to +??, Aug. +?? to +90 , OND +61 to +62


Corn market closed poorly and is now taking aim at testing the lower end of our 20 cent trading range the market has been in for the past several weeks. It probably would not take much to get trade motivated to the downside, maybe a dip below Friday’s lows of 6.28 ¼. Taking out these lows could ignite a 10 cent break. We should see some support at 6.15, and even greater support as we near 6.00. For now, expect heavy selling on any rallies from 6.40 to 6.50.