Matt Pierce shares this article on projections for Chinese imports of US corn:

CHICAGO, Feb 3 (Reuters) - Following its first large

purchase of U.S. corn in more than four years in 2010, China

may need to import as much as 9 million tonnes of corn this

year, an official with the U.S. Grains Council said on

Thursday.

“Estimates given to us were that China is short 10-15

million tonnes (394 million to 591 million bushels) in stocks

and will need to purchase corn this year,” USGC chairman Terry

Vinduska said in a statement.

“We learned the government normally keeps stocks at 30

percent but they are currently a little over 5 percent, which

may lead to imports of 3-9 million tons (118-354 million

bushels),” Vinduska said.

The U.S. Department of Agriculture has projected that China

will import 1 million tonnes of corn in the 2010/11 marketing

year ending Aug. 31, but many private forecasts are

considerably higher.

China’s 2009 corn harvest was reduced by a drought, and the

country’s demand for animal feed has been booming.

While in China last week, officials from the Grains Council

and the National Corn Growers Association met with analysts and

industry experts who said corn demand in China remains strong

because of an economy growing at 8 to 10 percent annually.

The group also discussed China’s anti-dumping investigation

against imports of U.S. distiller’s dried grains (DDGS).

“We found that importers would like to more than double the

3 million tons of U.S. DDGs (that) China imported last year,

eventually reaching 10 million tons in annual imports,”

Vinduska said.

“However,” he said, “they recognize the tremendous growth

shown in 2010 may need to slow down to allow internal markets

to adjust. One way to slow the growth was to launch the

anti-dumping case.”

As cotton reaches historic highs, Matt Pierce shares this news update on proposed purchase restrictions:

NEW YORK (Dow Jones)–Intercontinental Exchange Inc. (ICE) is proposing restrictions on large purchases of cotton, as prices for the fiber whiz past historic highs, spelling trouble for mills and apparel producers.
Cotton prices for March delivery Thursday hit $1.8122 a pound, a post-Civil War high.
In a notice this week, the exchange, which oversees the U.S.’s largest soft commodities trade, proposed requiring market participants to prove it was “economically appropriate” if they want to buy or sell more than 300 contracts, or 30,000 bales of cotton.
The move is thought to limit speculative trading, on which some of the market’s volatility is blamed.
The proposed measure, a rare intervention in the cotton market, is subject to approval by the exchange committee.
Also this week, the exchange said it was proposing increasing daily trading limits for the cotton contract, scaled according to its price. That measure requires the approval of the Commodity Futures Trading Commission.
-By Leslie Josephs; Dow Jones Newswires

CME opening delayed until 10:00 AM CST

Morning calls are moderately higher across the board with corn and beans setting new contract highs overnight. Wheat is just off its Aug 6th high. No early help from macros but the market does not need them to rally today. Crude palm was higher overnight due to flooding concern in Indonesia and Malaysia. Couple this with a cyclone hitting Australian sugar cane production and we have enough support from softs. Rising tensions in Egypt will likely pop prices in crude with the growing political crisis in Jordan talked about heavily. Both factors should help commodities as a whole as money runs out of equities looking for a “safe” haven.

The strike appears to be over in Argentina for a 15-day period while formal negotiations occur between government reps and port and farm workers. Major issues are wages and export tariffs. Weather in Argentina remains wet for the rest of this week offering bearish momentum but excessive rains in northern Brazil offer a bullish impact. No changes to crop expectations today.

I think overall the market should rally in a light volume session. Market participation will be limited during snowmageddon! Chicago is not out of the woods yet with one more layer of snow expected over the next 6 hours. I believe the upside remains the path of least resistance no matter what happens with any USD rally today. Retain a bullish bias heading into the first half of Feb.

GrainAnalyst.com has received this message from Matt Pierce:

My office is closed due to snow damage. I will be on the floor but not writing a formal wire. Its a nightmare outside!
—MPI

Historical Information on the KW-W spread
As Premium Subscribers know, Matt Pierce frequently discusses intermarket spreads. In light of recent activity on the current spread Kansas City wheat against Chicago wheat, Matt offers this historical information from 2006 and 2007 on the spread:

These are historical numbers for intermarket spreads between KC and CHI wheat. These are highs for respective months.

KWN-WN 2006=128

KWU-WU 2006=117

KWZ-WZ 2006=110

KWH-WH 2007=92

—MPI

Strategies using combinations of positions such as spreads and straddles are no less risky than taking straight long or short futures or options positions. Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results.

Matt Pierce shares this news item of note…
WASHINGTON, Jan. 25, 2011 — Private exporters reported to the U.S. Department of Agriculture the following activity:

–Export sales of 2,740,000 metric tons of soybeans for delivery to China during the 2011/2012 marketing year; and

–Export sales of 110,000 metric tons of soybeans for delivery to China during the 2011/2012 marketing year; and

–Export sales of 114,000 metric tons of soybeans for delivery to Taiwan during the 2010/2011 marketing year.

The marketing year for soybeans began Sept. 1.

Jan. 12 (Bloomberg) — Argentine farmers won’t sell wheat, corn or soybeans from Jan. 17-Jan. 24 to protest the government’s latest policy on exports. Farm leaders spoke today at a press conference in Buenos Aires. Argentina’s Agriculture Ministry earlier today lifted export restrictions on wheat.

http://www.bloomberg.com/news/2011-01-12/argentine-farmers-won-t-sell-soybeans-for-week-in-export-controls-protest.html

By Whitney McFerron
Jan. 6 (Bloomberg) — The Chinese government’s anti-dumping investigation of U.S. dried distillers grains, a corn-based feed ingredient, may disrupt trade and result in higher duties on imports, the U.S. Grains Council said.
Distillers grains, commonly known as DDGs, are a by-product of making ethanol from corn. China’s current 5 percent duty on U.S. DDGS might increase to as much as 100 percent during the dumping investigation, which will take up to a year, according to Rebecca Bratter, the director of trade development for the Washington-based council.
China’s Ministry of Commerce announced on Dec. 28 that the government would probe unfair trade practices after receiving complaints from four domestic ethanol producers. The country is the world’s biggest user of grain.
“This is potentially disruptive, and China is a very critical partner for us,” Bratter said today on a conference call with reporters. “We are dedicated to the free and open flow of trade, and we certainly want to see this resolved in the most expedient manner possible.”
In the first 10 months of 2010, China imported $427 million of U.S. DDGS, or between 10 percent and 12 percent of U.S.
production, she said.
The four Chinese ethanol companies that filed the complaint represent about 50 percent of DDGS output in China, which produces about 3.5 million metric tons annually, Bratter said.

GrainAnalyst.com Premium Subscribers: Be watching for Matt’s special report next week on the upcoming WASDE.

By Michael Hirtzer

CHICAGO, Jan 5 (Reuters) - U.S. corn, soybeans and wheat rallied on Wednesday a day after a sell-off in commodities drew investors to grains, with soybeans surging 1.7 percent on talk of Chinese demand and concerns over Argentine crop weather.  U.S. corn futures rose after hitting a two-week low early even as the dollar rose about 1 percent on signs of an improving U.S. economy. [USD/]    Wheat futures also climbed after opening lower, led by futures for higher-protein wheat at the Kansas City exchange.    “Nothing has changed fundamentally. Everything went down on profit-taking and liquidation but the fundamentals are still bullish,” said Matt Pierce, analyst for GrainAnalyst.com. Wheat prices have been supported by excessive rains in Australia downgrading the wheat quality, while hot, dry weather in Argentina has supported both corn and soybean futures.

Chicago Board of Trade March soybeans were 19-1/2cents higher at $13.89 per bushel and March corn up 3-1/4cents to $6.11-3/4 as of 10:50 a.m. CDT (1650 GMT).    CBOT March wheat was up 4 cents at $7.93-1/4 and KCBT March wheat  up 7 cents at $8.56-1/4. Light showers this week benefited the pollinating corn crop in Argentina, but more dry weather is forecast and that could stress soybeans as the crop begins to set pods, said Don Roose, analyst at U.S. Commodities in West Des Moines, Iowa.    “The soybeans still have the crucial time frame to go through yet (in Argentina) and we’re supposed to warm up again,” Roose said.    “So it goes back to some of the same factors: China underneath the market on these breaks and we’re still not sure of the supply out of South America,” he said.  China was seeking shipments of U.S. soybeans for shipments in March and November and also shipments from Brazil this spring, analysts and traders said.  Jeffrey Currie, Global Head of Commodities for Goldman Sachs, on Wednesday said soybeans are a more attractive investment than wheat due to greater potential demand growth and limited supply base.  Soybean and corn futures eased for the first two days of the week after each commodity hit 29-month highs.    Investment funds have been heavy sellers while index fundshave also started to rebalance commodity holdings.    The dollar index  touched a one-week high following news that the U.S. private sector added more jobs than analysts expected. A stronger dollar makes U.S. commodities less attractive to exporters.    But commercial firms bought soybean and corn futures to take advantage of the break in prices.  “The market has been down three days in a row, it was hit hard so it’s due for a correction. Also, commercials were buying beans yesterday and again today,” said Glenn Hollander of Chicago cash grain house Hollander-Feuerhaken.    “We saw a broad-based commodities sell-off yesterday and the pressure is continuing today as the dollar is a bearishfactor for commodities,” said Ker Chung Yang, an analyst at Phillip Futures in Singapore. “For grains, losses should be capped because of unfavorable weather in U.S., eastern Australia, China and Russia. The weather issue is still lingering and investors can’t really overlook it.”  Grain and soy markets are unlikely to fall too far going into the U.S. Department of Agriculture’s Jan. 12 monthly supply and demand report, analysts say.