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Corn saw a second straight day of very sharp losses in futures yesterday. This came with heavy selling by funds and active trade in the soybean/corn spread. Traders report that selling in corn was tied to the fact that additional acres are available to corn and soybeans in the US this spring due to a combination of lower cotton and winter wheat acres along with the release of additional acreage from the Conservation Reserve Program last year. The deteriorating supply situation in corn that was highlighted on Monday’s USDA reports has heightened concerns that corn could see a substantial gain in acreage this spring if prices remain anywhere near the recent highs. South Korea feed makers bought 101,000 tonnes of US corn on an announced tender. This may have provided some psychological support due to the recent deterioration of corn demand by South Korea. The Philippines has said that it will import 200,000 tonnes of corn for arrival in March or April. Snow today and very cold weather for the remainder of the week are expected to sharply curtail farmer selling this week. The cold weather is also causing barge freight traders to anticipate traffic problems this week and into the weekend, especially on the Illinois and Upper Mississippi Rivers. Weather in Argentina remains hot and dry during the corn pollination season and that is causing substantial stress to the corn crop there.
CASH NEWS AND TENDERS: A group of feed makers from South Korea bought 101,000 tonnes of corn for delivery in April.
WEATHER: Brazil continues to see some relief from dryness in Parana and Rio Grande do Sul where crop conditions have improved in recent days. More scattered thunderstorms are expected today. Argentina remains hot and dry with more of the same expected today and tomorrow.
TODAY’S GUIDANCE: Funds were big sellers in corn yesterday despite being buyers in other pits, and other selling stemmed from a further correction in the corn/soybean relationship. This has been underway since mid-December and it is needed to reduce corn acres in a year when more acres will be available to that crop due to lower cotton and winter wheat plantings as well as releases from the Conservation Reserve Program. Support remains at 354 1/2 to 358 in the March contract and again near 350. Resistance remains near 380.
