Corn demand supports prices
Corn Fundamentals: Bullish to corn futures is the day-to-day foreign demand for USA corn (never more evident as four of the five days last week, S Korea was a buyer of optional origin corn) and prospects for the Dec corn production report to come in smaller than the Nov USDA report as Michigan's harvest is 14% behind normal with Ohio's harvest 8% behind normal. S Africa corn country remains suspect as weather has been more uncooperative than usual.
Also bullish to corn is how the basis levels continue to be supported allowing for cash values to remain relatively close to the futures drive higher. Bearish to corn futures is signs of domestic price rationing, most evident in the feeder cattle futures and chick and egg data ( see most recent chick and egg data), as well as huge number of combined futures and options longs held by the non commercials.
Ethanol Data: The Energy Information Administration has finally released its findings for the month of Sept ethanol production and end stocks. It really should not come as a surprise how production was mildly less in Sept vs the previous month, as it is more common than most realize. USDA is presently estimating corn used for the production of ethanol at 2.15 billion bu. Based on our research as a result of the first month of the marketing yr release today, USDA needs to raise its estimate to 2.155 bil bu. The ethanol stocks are at a level of 9.7 million barrels, up 500,000 from the previous month. Stocks are estimated at 9.7 million barrels vs yr earlier levels of 5.3 million barrels. Those with access to our "Special Reports" section of our internet site (first timers are always welcome to access an immediate 2 day trial) will be able to view both production and stocks data.
Corn Exports: Are stronger than typical export pace, 39% above year ago levels and at 991 mil bu, 30% higher than the most recent three year ave of 765 million bu. Weekly export sales of 40.2 million bu are below the five week ave of 45.5 mil bu and below the ten week ave of 50.5 million bu. Something to consider, if China follows through with its plans to cancel sales made at much lower prices to S Korea for Dec delivery to only re sell them at higher values for a later shipment date, look for S Korea to have to come to the USA as it remains the only store in the world which has immediate access to freshly harvested supplies. Demand from ethanol continues to compete with other domestic use as well as exporters creating steady to firming basis levels (Dec Delivery at the Gulf hit a yearly high for this time of year at 68 cents over Dec futures very early this week), in part because of corn going to storage and not across the scale.
World End Stocks to Use: As of the Nov WASDE, world end stocks to use are 11.1% vs year earlier levels of 16.0% and are the tightest on record dating back to 1970. Even more bullish for is how world end stocks for wheat are 16.4% vs year earlier levels of 19.9% and the tightest on hand dating back to 1970. Argentina will be next in line to harvest its corn crop in March and India, its wheat crop also in the month of March. Barring adverse weather, both countries are expected to relieve some bullishness from present values.