The corn market was lower on Tuesday ahead of the USDA report as we saw weaker outside markets and traders squaring positions. The July and December contracts closed down about 6 cents near the lows of the day as corn gapped lower on the opening and never really recovered. The outside market seemed to be the spark that corn needed to open lower as the US$ was higher and crude was lower right from the beginning. The US$ closed up about 20 points and crude was slightly lower after trading down $1.50 during the grain session. There is very little fundamental news right now as farmers are starting to talk about the up coming planting season and the crop from Brazil and Argentina is actually getting bigger which is what usually happens with big crops. The USDA report today isn’t usually a big deal, but with the possible readjustment of the 2009 production, it could be important today. The March 31st report is the much bigger report as we get planting intentions and actual stocks numbers from Sept 1st to Mar 1st. Technically, the corn market looks negative, but it has found some buyers on breaks. The volume was ok at 187,000 contracts and funds were sellers of about 7,000 contracts.

Overnight, the corn market closed slightly lower with the July and December closing down about 2 cents. The USDA report didn’t have any big surprises, but it will probably be considered bearish because of the increased carryout and the very slight reduction in production. The market was looking for a bigger reduction in production and a decline in usage keeping the ending stocks about the same. What we got was a pretty good reduction in the export number which raised the ending stocks 80 mil bushels. This isn’t a big adjustment, but the market estimates were for unchanged. The world stocks numbers jumped higher as well as Argentina increased their production number significantly, which shouldn’t be completely unexpected, but it is now in print by the USDA . The USDA reduced exports 100 mil while the market was expecting a reduction of 50 mil. The corn market will be called 2-4 lower this morning with the outside markets trading around unchanged. Remember, the corn market has broker 13 cents the last 3 days into the report, so a break today will probably be supported and if it doesn’t, watch out.

Globex Overnight Contract Last Net Change High Low Volume ZCH10 357^0 -1^6 359^0 356^6 3177 ZCK10 367^2 -1^6 369^6 367^0 7293 ZCN10 378^2 -1^6 380^2 377^6 1765 ZCU10 386^6 -2^0 389^0 386^6 1467

Post Report Opening Calls: 2-4 lower

Top News **USDA Mar Corn 09/10 Production: 13.13 bln bu; est. 13.1 bln bu.; Feb 13.15 bln bu. **US Mar Corn 09/10 Carryout: 1.799 bln bu. ; est. 1.715; Feb Rpt 1.719 **World 09/10 Corn Carryout: 140.2 mmt; Feb Rpt 134.0 **Mar China 09/10 Corn Output: 155.0 mmt; Feb Rpt 155.0 **Mar S Africa 09/10 Corn Output: 13.5 mmt; Feb Rpt 11.5 **Mar Argentina 09/10 Corn Output: 21.0 mmt; Feb Rpt 17.2 -- French Barley 09/10 ending stockpiles in France were lowered to 3.81 mln mt down 269,000 mt by French Farm Ministry -- Corn 09/10 ending stockpiles in France were lowered to 2.48 mln mt down 203,000 mt by French Farm Ministry -- Chinese customs data shows Corn exports in Feb only totaled 324 mt down from January's 41,981 mt -- Private group sees overall 2010/11 Brazil ethanol production at 29.8 billion L up from the current year's by 4.5 billion L, ethanol from central-south areas are at 27.6 bln L in 10/11 vs. 23.2 bln L in 09/10 -- Univ of Missouri ag group estimates 4.63 bln bu for ethanol production in 2010/11 up from 2009/10 4.25 mln bu -- 2010 US Corn planted acres estimated at 89.5 mln acres by Univ of Missouri group -- 2010 US Soybean planted acres estimated at 76.6 mln acres by Univ of Missouri group -- 2010 US Corn Crop size estimated at 13.13 bln bu by Univ of Missouri group -- 2010 US Soybean Crop size estimated at 3.21 bln bu by Univ of Missouri group -- Pending Tender: Mar 19th is date set for Japanese SBS tender, they’re also seeking a total of 11,000 mt of Barley, acc. to ag ministry official. 9,000 mt will be for Barley malting -- MARCH 2010 CORN FUTURES 3/9/10 : 1,058 contracts -- Sep Corn futures on the Dalian Exchange settled 2 yuan higher at 1,871 yuan/mt -- Liffe June corn futures were off -0.25 euro at 133.25 euros/mt. -- Globex Corn Vol: 165,327; Pit Vol: 14,826; Open Interest change: - 1,655 -- Weather: 6 - 10 Day Forecast: Normal to Above Temps. Below Normal Precip. -- Outside markets: Energy Complex -0.02 at $81.47; Gold & Silver: +1.2 at $1123.5 & +0.017 at $17.355; US $ +0.050 at $80.655

Cash Markets -- CIF Corn steady up 1. Mar. +34 to +36, April +37 to +38, May +40 to +41, June +35 to +38, July +39 to +41, Oct. +41 to +43, Nov. +41 to +43, Jan. +36 to +38

TREND:

Crop report in AM so should leave well enough alone and see what the report says-----but I see a wheat and corn market that closed right on the low of the day and low of the trade for the last 2 to 3 weeks. Think this leaves those markets vulnerable to a bearish report that causes the market to gap lower leaving this weeks trade and possibly moving to a test of the Jan-Feb lows.

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