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NEAR-TERM MARKET FUNDAMENTALS: Corn fell sharply from the opening bell yesterday with traders citing a negative economic outlook as the main factor along with the snowball effect of selling that this brought to both equity and commodity markets. Some analysts are concerned about the potential for continued demand destruction in US domestic feed demand and ethanol usage if the current recession worsens. Funds were substantial sellers on the day with traders indicating that they sold both in the early going and again prior to the close. However, farmer selling was moderate on the break and this enabled most interior US basis levels to hold steady on the day. Weather in South America is becoming less of a factor in corn with each passing day although conditions are said to be continuing to improve slightly in the crucial corn-growing state of Parana in Brazil. Forecasts in Argentina still call for hot and dry conditions today and tomorrow with thunderstorms in many growing areas forecast on Friday and Saturday. However, the amounts and coverage may be somewhat less than some forecasters indicated yesterday. This week’s export inspections in corn were 33.856 million bushels versus 29.803 million last week. Cumulative inspections stand at 40.7% of the USDA’s projected total compared to a 5-year average of 44.7%. Inspections need to average 36.126 million bushels each week to reach the projection.
CASH NEWS AND TENDERS: A Taiwanese buyer bought 23,000 tonnes of US corn.
WEATHER: Brazil saw scattered showers in southern Mato Grosso, parts of Goias and into northern Parana over the past 24 hours. Scattered showers and thunderstorms are expected to occur on and off in most growing areas in Brazil into Friday. Forecasters are still calling for mostly hot and dry conditions in major corn and soybean areas of Argentina with thunderstorms expected on Friday. However, the amounts and coverage may be less than originally forecast.
TODAY’S GUIDANCE: Yesterday’s break may have sent the clearest signal to-date to farmers that they may not see the 400 level in cash corn prices again any time soon. This has been the level most often cited by farmers as their selling point for old crop supplies, and the push below January and February lows in the May contract yesterday raises the possibility that the December low at 315 3/4 could be taken out as well. This may induce accelerated selling by discouraged farmers.
