The corn market moved higher on Friday and closed in the upper end of the day’s trading range. Traders said that the market was bolstered by light fund buying with farmer selling easing at the end of the week after being somewhat higher earlier in the week. Weakness overnight was credited mainly to the higher dollar along with fears that farmer selling will again increase this week if the market moves higher. Export sales finished the year on a weak note with Friday’s Export Sales Report showing the smallest total net sales of the marketing year so far. Net sales came in at 269,900 tonnes, all for the current marketing year. As of December 25th, cumulative sales stood at 46.0% of the USDA forecast for 2008/2009, well below the 5 year average of 53.2%. Sales need to average 691,000 tonnes each week to reach the USDA forecast. Flood waters receded sharply on the Illinois River at the end of last week and through the weekend bringing loading conditions back to near normal this morning. Traders report that domestic feed demand also remains weak. On the ethanol front, distiller losses widened by as much as 5 cents last week. Traders and analysts indicate that January may bring increased activity by index funds which will rebalance their positions to reflect price changes in individual markets over the course of last year. Some analysts indicate that this will bring net selling to corn futures. An example of the lost export demand forces for corn can be seen in news that Philippine feed millers have bought more than 300,000 tonnes of wheat since October; mostly from the Ukraine.
WEATHER: Brazil saw welcome showers and thunderstorms over the past three days. Conditions are expected to be dry to mostly dry today and tomorrow. Argentina saw mostly dry weather over the past three days with scattered showers in the north. Weather today and tomorrow is expected to be mostly dry with temperatures warm to hot. In the US, seasonably cold temperatures are expected in the Midwest and Plains to start the week. Snow is expected Wednesday in the central Midwest with snow in the eastern Midwest on Thursday.
TODAY’S GUIDANCE: January will be a time of testing for corn. This is the crop that US farmers are most likely to sell on a rally and demand is weak on all fronts for corn. The latest Export Sales Report on Friday confirmed the weak demand picture with the smallest sales total of the current marketing year. This appears to suggest that demand can weaken even further on rallies at a time when farmers appear likely to increase selling on rallies. Fund trading is the great unknown that could still push corn higher during the month of January, but indications now are that the 2009 ‘rebalancing’ will result in selling corn. If we see a lull in farmer selling and outside markets push corn prices higher, it may be time to test the short side.
