Daily Market Commentary

2/22/12

Good Morning,

The corn market closed 12 cents lower on Tuesday with the weakness tied to spreading – soybean/corn and soybean/wheat – ahead of the USDA Annual Outlook Meeting later this week. For several weeks there have been discussions how bearish the USDA Outlook Meeting might be with 2012/13 US corn end stocks expected to be up to 1,500-1,600 Mil Bu. The USDA is expected to release a projection for US 2012 corn plantings at its outlook forum on Thursday and Friday this week. Earlier this month the agency had a projected 2012 corn planting acres at 94 million which would be the most since 1944.
Morgan Stanley released a statement this morning stating that old crop corn futures face a downside risk in the coming weeks because US Ethanol production is likely to slow. Concern over the surge in record ethanol stocks will force the industry to slow corn grind heavily in coming weeks. With higher energy prices and a national gasoline average well over $3.50/gallon, consumers are likely to reduce the miles driven.
Cash corn basis bids continue to be strong with limited movement from producers. End users and exporters are fighting for limited cash supplies.
Grain markets are expected to open 2-4 lower. Crude oil is lower and the dollar is trading higher vs. most major currencies.

Have a Safe Day!

Garry Gard
ggard@didionmillling.com
920-348-5868 ext. *844