Buy 1 Dec Corn (ZCZ0) @ limt 380
Stop @ 369
Target @ 429
The surge higher in the corn market yesterday was clearly sparked by rumors of interest in China for corn imports. Higher prices in China recently have sparked talk of 200,000-300,000 tonnes in imports but talk yesterday was of interest from China commercial traders in seeking import permits for up to 2 million tonnes. China's official import quota stands at 7.2 million tonnes but only 40% (2.88 million tonnes) has been allocated to near 1,000 private firms and permits would be needed. Cash dealers see China domestic prices near $284/tonne and the cost of US corn to China near $245/tonne. The corn rumors may have also been sparked by talk of increase demand for China to import dried distillers grains which is a by-product of corn ethanol. Traders are on the lookout for signs that the corn market is ready to turn around, but many agree that the outlook is still mixed. Weather is still dominating traders' attention and the outlook now calls for a dry spell across most of the Corn Belt after moderate to heavy rains move out of the eastern Delta, mid-south and eastern Midwest later today. Cool and dry conditions are expected tomorrow with a warm up starting into the weekend. The moisture outlook remains drier into next week with the exception of light rains in the north central Midwest on Sunday and a cell of moderate to heavier rains moving into Iowa on Monday. This cell is expected to travel east across northern Illinois and northern Indiana into Tuesday while areas to the south remain dry. One analyst noted that despite the ample to surplus soil moisture levels, conditions are slightly drier than last year and temperatures have definitely been warmer than last year in major growing areas. Corn rallied sharply yesterday to the highest level since before the Planting Intentions and Grain Stocks reports on March 31st. Those reports indicated that the USDA 'found' 200 million bushels more than traders expected, and that added supply should be reflected on Friday's supply and demand report. Traders are looking for 2009/10 ending corn stocks to be raised to over 1.920 billion bushels from the March estimate of 1.799 billion. The USDA will issue its weekly Export Sales report this morning. Sales need to average 601,300 tonnes each week to reach the USDA's current export projection. Traders are looking for today's number to be near that level to as much as 900,000 tonnes. The USDA announced a sale of 114,000 tonnes of corn to Mexico yesterday. Of that total, just over 53,000 tonnes were for 2009/10 delivery and nearly 61,000 tonnes were for 2010/11 delivery. Brazil raised its estimate of this year's corn crop yesterday to 54.1 million tonnes versus a forecast of 51.4 million in March.
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