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NEAR-TERM MARKET FUNDAMENTALS: Economic worries have cooled a bit this morning and traders indicate that this is taking the pressure off corn to start the week. Farmer selling has remained light to moderate during the recent decline and traders indicate that this is also a supportive factor along with strong export sales on the latest report which was released on Friday. The Commitments of Traders Report for the week ending 2/17 showed large overall net selling by funds. Index funds were net sellers of 3,156 contracts while trend-following funds were very large net sellers of 25,460 contracts. This takes the trend-followers net short position to 67,465. This exceeds to high net short position seen in late 2008 by a wide margin. Weekly export sales were considered very strong for corn with the latest total topping the 1.0 million tonne level for the 5th week in a row. Net sales came in at 1,332,300 tonnes, all for the current marketing year. Cumulative corn sales stood at 62.4% of the USDA forecast for 2008/2009 versus a 5 year average of 65.8%. Cumulative sales have been catching up rapidly in recent weeks after lagging far behind the average rate for nearly the entire crop year. One analyst noted that the recent surge in corn export sales helps to explain why the USDA left its export projection unchanged on the latest Supply and Demand Report. Sales of 582,000 tonnes are now needed each week to reach the USDA forecast. The Chicago Federal Reserve Bank’s February AgLetter reports that farmland values in Iowa and states surrounding Lake Michigan were down during the 4th Quarter of 2008. This was the first quarterly decrease in a decade. Basis levels firmed in central Illinois over the last half of last week.
WEATHER: On Friday, showers and thunderstorms in Argentina were concentrated mainly to the north and somewhat to the east with coverage running at about 40% versus earlier expectations of up to 70%. Temperatures were much cooler over the weekend with a warm up expected to near normal this week. Dry weather is expected in Argentina into mid week. Weather was somewhat drier in northern growing areas of Brazil over the weekend where the soybean harvest is currently underway. Scattered showers and thunderstorms are expected in the central and southern soybean belt including the key corn-growing sate of Parana. This should be beneficial.
TODAY’S GUIDANCE: Corn has more potential for follow-through short covering than either soybeans or wheat due to the sharp ongoing surge in export buying and the fact that corn acreage may be down this spring versus last year in the US. In addition, farmers remain disciplined sellers in corn as evidenced by last week’s surge in the corn basis in central Illinois. Look for continued short-covering, possibly led by funds.
TODAY’S MARKET IDEAS: May corn pushed through last week’s highs on the overnight rally and that may attract additional buying in the day session.
