Morning Market Review by Bryce Knorr
Futures are fading Thursday’s USDA report rally across the board this morning, with soybeans leading the market lower. Nervous outside markets in Europe could also be a drag, Nobel Prizes notwithstanding.
Corn is seeing a modest pullback so far, after trading almost up its daily trading limit in the wake of yesterday’s Production, Supply and Demand reports from USDA. While USDA trimmed its forecast of 2012 ending stocks, most of the reduction came from lower old crop carryout, with production flat and demand weaker.
Demand could be in the spotlight again this morning. Export Sales out this morning, delayed due to Columbus Day, are expected to remain weak, coming in around 14 million bushels. Foreign buyers remain wary: South Korea today issued and then cancelled a tender for up to 8.3 million bushels of corn and 2.6 million bushels of feed wheat tender due to high prices.
Ethanol margins moved briefly back into the black in some areas last week on stronger DDGSs and weaker corn prices, but that advantage may be fleeting with this week’s move higher. The government raised its estimate of daily production by 15,000 barrels a day last week.
Storms this weekend should slow harvest from Kansas and Missouri up the Upper Mississippi River Valley to the Great Lakes. With harvest winding down, that should limit hedge pressure and add further strength to basis. For more, see my Weekly Basis Review. For cash prices and trends in your area, seem our Cash & Basis Charts.